Credit Rating Exec: "We Sold Our Souls to the Devil"
Internal documents show that while rating firms publicly defended their practices, executives privately wondered when the house of cards would fall. Full Story »
Posted by Derek Hawkins
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Posted by Derek Hawkins - Oct 24, 2008 - 9:54 AM PDT
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Derek Hawkins (review), Fabrice Florin (review), Garrett Valenzuela (review), Walter Cox (review), Michael Bugeja (review), Alan Levitt (review), Nicole Brown (review), William Hughes-Games (review), Pamela de Maigret (review)
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Derek Hawkins - Oct 24, 2008 - 9:54 AM PDT
Informative report about internal documents released at a congressional hearing Tuesday, which suggest that credit rating agencies acted unethically, due to fundamental conflicts of interest built into the current rating system. This article provides ample factual evidence, but could include more sources and independent perspectives.
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(11 answers)
A very clear explanation of the central fact of our economic crisis--rating agencies defrauded those who depended on the quality of their ratings. Their "issuer-pays" business model constituted a clear conflict of interest, and warnings to this effect were ignored
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(20 answers)
This piece based on a congressional hearing attempts to explain one of the fundamental components that contributed to the current economic collapse--ratings agencies, who funds them, and the conflicts of interest that arise out of them. Issuer-funded agencies have the greatest conflict in that those underwriting service do so with expectations of favorable scores. This is similar to the same kind of ethical conflict of interest that arose with Enron when those associated with investment banking were giving the near bankrupt company strong buy ratings even as it announced in its death throes that it had overstated profits by $600 million. Because Enron, like many of its current counterparts, devised complex financial statements, ... More »
I am conducting the same type of research on top media and technology companies, following Bethany McLean's lead and boiling down complex annual reports into a few key factors and variables associated with profits and personnel (including CEO compensation).
Despite Egan’s warning that action is needed, Rep. Darrell Issa (R-Calif.) asked the witnesses how to keep Congress from “doing what we do best: either doing ... More »
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(22 answers)
A rather long winded piece. Condensed into a quarter of the size would have make it clearer and given it much more impact.
As private individuals who use such reports to make economic decisions, we should stop being surprised by the fact that given time, some clever laddie will find a way to subvert any system or set of regulations. We have to go back to the basics that our Grandfathers knew. Save your money before you buy something. Keep out of debt and most of all if someone is offering you something for nothing you will probably get nothing for something. We could use a Maggie Thatcher back in ... More »
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(7 answers)
This impartial investigative journalism is absolutely imperative to understand the subtle complexities of the present economic-political crisis. A "small thing" like the 1970's switch from having the payment for securities ratings go from the investors to the issuers, opened a hugeconflict of interest which helped to bring us to where we are today. Pamela de Maigret
So "conflict of interest" is to blame? No, it is a general break down in the integrity of the people running the three major rating institutions, and the people in the banks and other financial groups who withhold their business if they don't get the fraudulent ratings they need to peddle their worthless paper, and the funds who bundle this trash and then leverage their companies for 20 or 30 times the value of the junk they are putting out. It may start with dishonest ratings of ... More »
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(7 answers)
It gives a good look at facts of the causes of the market meltdown. it also gives a clear view of the problems and their effects.
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(11 answers)
The story had a lot of information in it but it also had a lot of anonymous sources. It was hard to dig through the BS and get to the actual story with quotes from real people. Overall, though, one could read this article and take something away from it.
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(6 answers)
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