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Let's hope we are all wealthy and retired by the time this house of cards falters.;O) / The whales are getting harpooned

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October 22, 2008 – Comments (3) | RELATED TICKERS: MCO

I have been repeatedly critical of the ratings agencies who contributed to the mess that we are in today by giving all sorts of garbage AAA ratings over the past several years.  These guys have gotten off way too easy.  I keep asking myself how on Earth do companies like Moodys and S&P even still exist?  Who takes anything that they say seriously?  Even if people for for reason that I can't possibly fathom still want to pay them for their "research" and ratings, the government should fine the heck out of them.  

Hopefully the following e-mailes that came out today in a hearing before the House Oversight Committee will turn public opinion against them enough to gaice someone in the government to give them the smackdown that they deserve. 

Take a look at this instant message conversation between two S&P officials about a mortgage-backed security deal from April 2007:

"Official #1: Btw (by the way) that deal is ridiculous.

Official #2: I know right...model def (definitely) does not capture half the risk.

Official #1: We should not be rating it.

Official #2: We rate every deal. It could be structured by cows and we would rate it."

or how about this excerpt from an e-mail that was written by an analytical manager in the collateralized debt obligations group at S&P:

"rating agencies continue to create" an "even bigger monster -- the CDO market. Let's hope we are all wealthy and retired by the time this house of cards falters.;O)"

 

Good grief.  We need some accountability here people.  Fine the heck out if these companies and mandate the creation of more ratings agencies to create competition rather for the ridiculous oligopoly that we have now.

S&P Officials: We'd Do a Deal 'Structured by Cows

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A few days ago I talked about the massive losses that Carl Ichan has taken this year.  Here are a few more heavy hitters who have been whiffing lately:

"Kerkorian’s stake in Ford Motor instituted just four months ago, carried a value of $1 billion. He’s getting out with some two-thirds less, according to estimates."  For a million or two I would have told him not to buy Ford back then and saved him a ton of money.

"Sumner Redstone at Viacom and CBS, sold $200 million in stock to meet a margin call. Speculation has suggested he may need to raise more."

"Sheldon Alderson grew Las Vegas Sands from a bit player in gaming to a teeming global gambling and entertainment empire. But what was valued at $148 a share just a year ago has declined 92%."

So sad...not.

Next Up: Our Billionaires’ Telethon

Deej 

3 Comments – Post Your Own

#1) On October 23, 2008 at 12:22 AM, nuf2bdangrus (< 20) wrote:

Social acrimony.  Once again, we are looted.  Will they get off the way they did as Global Crossing, Enron, Worldcom robbed everybody?

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#2) On October 23, 2008 at 12:22 AM, StockSpreadsheet (73.43) wrote:

Deej,

Maybe the government should force a merger between the ratings agencies and the bond insurers.  That way, if the ratings agencies give something an AAA rating and it tanks, they will end up on the hook to pay the difference when the bonds default.  I bet if that was the case, we would have seen far fewer AAA-rated CDO's based on subprime mortgages. 

Craig 

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#3) On October 23, 2008 at 7:44 AM, devoish (98.58) wrote:

Can I have Elliot Spitzer on the prosecuting team?

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