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
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.”