This page has been archived and commenting is disabled.
Guest Post: Rating Agency Scandal - SEC Chooses Remedial Over Preventative
Submitted by Damien Hoffman of Wall St. Cheat Sheet
Extra, Extra! Read all about it:
SEC Enforcement Director Robert Khuzami told the Senate Judiciary
Committee the SEC is “looking very closely at credit rating agencies” —
Moody’s Investors Service (MCO), Standard & Poor’s (MHP) and Fitch
Ratings — and is “focused on that area” for their role in the global
derivatives scam.
Seriously? Do we live under the rule of law in a capitalist economy? If so, companies need incentives to avoid running scams before they run them. Otherwise, the cost-benefit analysis will continue to look like this:
1) Make mega-billions running a “legal” scam which will later come under scrutiny.
2) Pay millions in fines.
3) Replace executives who walk away after collecting huge salaries, bonuses, and dismissal packages.
4) Time passes, all is forgotten.
5) Repeat Step #1.
I wonder how many more years the SEC will “look at” the ratings
agencies before they nail them for putting USDA Grade A stickers on
rotting horse shit. Maybe the SEC should do some soul-searching and ask
why they allow private for-profit companies (with tons of conflicts of
interests) to act as an oversight committee for financial products. Is
that not the role of a governor? It’s as laughable as renaming
“bribery” the socially acceptable term “lobbying.”
»
- 3364 reads
- Printer-friendly version
- Send to friend
- advertisements -
The Mob always buys a restaurant, a construction business or a trash hauler to set up the legitimate front.
Wall Street has it's rating agency business and in-the-bag analysts.
This is normal.
Wait so we are going to have the SEC look at the rating agencies for complicity with the global ponzi scheme...well damn. Is this new way of saying "The pot calling the kettle black"?
Now all I need is for the answer to come back "Nope these guys are great! They're all straight shooters with upper management written all over them"
http://anonymousmonetarist.blogspot.com/2009/12/enemies-of-people.html
Once upon a time I sat down in front of the agencies. Had an exclusive to place a'third'a billion face of a rather unique asset class. In order to get the buy side to bite of course we needed a rating.
It is not in any way embellishment to state that the work done by the agencies on this deal was so amateurish, so ephemeral, that a high school student with the toolkit of 'opposable thumbs and frontal lobes' could have coaxed Mr. Google into producing a superior report.
I remember when I met with the ratings agencies to discuss the impact of the introduction of the new International Accounting Standards, specifically, the new rules on the treatment of derivatives (IAS39) which would place tough rules on what would be off balance sheet, to prevent the use of derivatives to hide debt. They said that their plan was to take the new accounts and then basically convert them back to the old standards and base their ratings on that.
I left the meeting certain in the knowledge I was dealing with a bunch of fucking idiots and given the amount of faith the investor market was placing on their ratings, we were certainly screwed.
When every government institution and the majority of the political system has been bought and paid for, what's left?
Even our military is being weakened by the day.
Sickening shit.
I'm announcing the creation of a new rating agency.
1) You send me the name of something you'd like me to rate. (No actual materials please. Let's not waste time.)
2) I stick a big gold sticker on it, and attach legalese explaining how I am in no way responsible or accountable for my work.
3) We all make a billion dollars.
4) The SEC calls and says "Excuse me please sir. If you happen to have just a minute.... I have a question that I hope won't trouble you too much, but just tell me if it does and I'll go away. I respect your privacy and all...."
5) I say "Fuck you SEC" and hang up the phone.
6) Some obscure congressman threatens some weak mealy-mouthed legislation.
7) I say "Limiting the profits of our rating operation would mean that the firm would lose its Top Talent. Now how would that be fair to me? Here's a generous campaign check for $1,000. (You don't even have the dignity or sense to ask for more, you cheap-ass whore). Run along now."
8) I annouce a new Super Double Gold Sticker rating, and we all make another billion dollars.
This is what we need in America:
"China Executes Securities Trader Who Hid Millions"
http://moneynews.newsmax.com/investing/China_Executes_Trader/2009/12/08/...
I hear they execute public officials that pull this shit too.
"Here's a generous campaign check for $1,000. (You don't even have the dignity or sense to ask for more, you cheap-ass whore). Run along now.""
LOL.
I'm in Chet, got some extra gold stickers.
I hear disgraced NBA ref Tim Donahy may be the next to head the SEC. What are the odds? (Ask Tim, he knows)
"We all make a billion dollars...
...we all make another billion dollars"
You had me with the first billion. Send me your email, i'm in.
Wash, Rinse, Repeat. Now that's even simple enough for me to understand :-)
Where do I sign up ?
If one owned Citigroup, B of A and RBS bank stock and sold it because by looking at its financials it was severely short of cash but now we are finding out that the banks were secretly given hundreds of billions by the central banks undisclosed to share holders. Why is this not fraud and market manipulation? What about... those who took a short positions because the information was withheld and lost billions?
BoE Secretly Loaned $102.9 Billion to RBS
http://www.cnbc.com/id/34126826
Federal Reserve Banks Secretly Lent Out $2.2 Trillion and Refuses to tell Senate Where Money Went
http://www.youtube.com/watch?v=oOpQkRsEfaU
Presidential Working Group on Financial Market Directly Buying Stock in the Stock Market
http://www.youtube.com/watch?v=X06kz9dzXho
So the banks secretly receive hundreds of billions in interest free money from the Fed. They buy US Treasuries and receive interest from the Taxpayer for buying the Treasuries. Then they turn around and also use free Fed money to purchase each others stock to bid it up the value of equities....The Fed and trillions of fake new money is the market. Audit the Fed!
that would be me, I woke up to a margin call, after my positions got smoked, in march.3 years of savings GONE in 2 hours ooouuuch
Fuck the Fed and their ilk. Now where did I put my Glock?
$3 Trillion pumped into the market equals 300 billion shares of $10 stock or nearly the entire Dow 30. The Fed and Treasury and their surrogates can not leave the market...the ARE the market....as long as they can secretly print money...to secretly buy equities and metals...they can always undersell and overbid anyone at any time....there is no refuge for the honest investor until this fraud is exposed...
I wonder how many more years the SEC will “look at” the ratings agencies before they nail them for putting USDA Grade A stickers on rotting horse shit.
rotflmao.......
schapiro is a paid for whore doing what the whore was paid to do....
The SEC will not "nail" the ratings agencies because the SEC aids and abets the the criminal enterprise that includes the rating agencies. Only a federal or state prosecutor prosecutor with testicular fortitude can smash this criminal enterprise. We need Shock and Awe RICO prosecutions...coast-to-coast arrests, from Countrywide to ratings agencies to Goldman Sachs and every one in between.
Justice demands hard time in jail for the hundreds of fraudsters where-ever they may be...Goldman Sachs, JPM, and other Wall Street banks and brokerages, the rating agencies and AIG, Countrywide and the mortgage industry and the appraisers, Freddie and Fannie and Citi and the big banksters, and then to the federal co-conspirators at U.S. Treasury, SEC, OTS, and the Federal Reserve, including Hank "the mole" Paulson, Ben "the bag man" Bernanke, Tim "the Wall Street patsy" Geithner, and then to the members of Congress who took money to facilitate the multiple frauds and fleecing of the taxpayers and pension funds.
Isn't this simply approval? Not even tacit. Just plain vanilla approval of the ratings agency's behaviors.
So, just by limited deduction isn't this just policy, now: The government is now chosen to lie as a matter of open policy - for our "own good"... After all - they are closely monitoring the moves and have not stepped in.
Sure doing well with that "trust" thingy, Big Brother.
Hold on a minute here folks. Moody's is a private company founded way back in 1909 long before the government messed around in our personal lives. It was created to meet a need for independent analysis of the relative merits of companies and bonds; think of it as "Consumer Reports" for the financial sector. When it was run honestly it was a valuable service. You don't have a problem with the magazine "Consumer Reports," do you? Or maybe you think the government should create its own version of "Consumer Reports."
There are other ratings agencies out there; if you don't think Moody's is honest then try another one. The idea that the government should take over such sectors of the economy is moronic and shows a lack of faith in free markets. You really think the government is going to run a ratings agency scrupulously???
But they have the unique advantage of causing the economy harm whereas other Consumer reports dont. Moodys failed in their job where a lot of investors depend on the rating. If you fail this blantantly it looks like fraud. Not just moodys but Standards&Poors because they were the most reputable .
""Or maybe you think the government should create its own version of "Consumer Reports."" - Consumer Reports can not send a stock exchange down by 6% (as happened to Greece). Given the, hm, ethically doubtful perfomance of the rating agencies in the CDS context - trusting those ppl is like handing a monkey a machine gun.
"shows a lack of faith in free markets." - how exactly is the market split between three players free?
http://en.wikipedia.org/wiki/Oligopoly
Indeed. After all that's transpired, why would we think the criminal enterprise known as government would be any more reliable?
I just want them held accountable
"..I wonder how many more years the SEC will “look at” the ratings agencies before they nail them for putting USDA Grade A stickers on rotting horse shit."
It's always far easier to say, "Hey, I think I'm Sorry", than to ask permission for something forbidden.
So you have you want to issue paper to: build a new factory for auto parts, retrofit a rusty coal burning plant, do an LBO with 10% percent money down or simply pool a bunch of mortgages on overpriced homes, to attract the natural buyers you pay the rating agencies for their opinion. Why on earth does anyone rely on those opinions? MCO and MHP should be buried at the Earth's core.