Wednesday, July 15, 2009

The Rating Agencies Get Hit

This will not be fun to watch, but it is well-deserved.

...litigation was being considered as an option against the Ratings Agencies.

And it has commenced. From the complaint:

The AAA ratings given by the agencies “proved to be wildly inaccurate and unreasonably high,” according to the suit, which also said that the methods used by the rating agencies to assess these packages of securities “were seriously flawed in conception and incompetently applied…”

The ratings agencies no longer played a passive role but would help the arrangers structure their deals so that they could rate them as highly as possible,” according to the Calpers suit

CALPERS is the California Pension Board. Big big big bucks--but Calpers is not necessarily interested in recovering the ~$1Bn in losses they've taken. Read the rest.

HT: Big Picture

1 comment:

Shoebox said...

It's about damn time! These agencies were the enablers of the entire meltdown. If they had rated fairly, the garbage would have been forced to provide higher yields which would have reduced the amount that entered the market. Because of the lack of integrity in these few firms, we will get a whole slew of new regulations that will do nothing but inhibit legitimated business from getting done.