Blog on the Run: Reloaded

Thursday, January 13, 2011 8:50 pm

Consider the source

Filed under: I want my money back. — Lex @ 8:50 pm
Tags: , ,

S&P and Moody’s: Reduce U.S. debt or we’ll reduce your bond ratings.

Oh, I have no doubt they’ll do it. I just don’t understand why anyone would care what they think, inasmuch as they told us that huge piles of liar loans were AAA investments.

I also don’t understand why everyone who works for them above the rank of office manager isn’t in prison, but that’s a whole ‘nother subject.

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Monday, June 14, 2010 8:33 pm

Cats and dogs living together

Moody’s sees the offshore-drilling industry headed for a disaster of biblical proportions: Old Testament, real wrath-of-God-type stuff, fire and brimstone coming down from the skies, rivers and seas boiling, forty years of darkness, earthquakes, volcanoes, the dead rising from the grave, human sacrifice … mass hysteria.*

And that’s just what they see. Given Moody’s performance in rating mortgage-backed securities, I’m even more worried about what they might be overlooking.

*Possibly not a direct quote. At least, not from Moody’s.

Friday, May 28, 2010 8:39 pm

Warren Buffett, come on down

I noted that billionaire Warren Buffett dumped a bunch of Moody’s stock (as did company CEO Raymond McDaniel) the same day Moody’s received a Wells notice, which is formal notification from the government that it intends to get a legal order to stop Moody’s from rating securities. Which is, you know, pretty much the bulk of what Moody’s does.

Well, as a result of that, Buffett was invited to testify before the Financial Crisis Inquiry Commission. He declined. What happened next?

FCIC:* Uh, dude? When we said “invite,” well, we were just being polite.

Buffett:* Screw you.

FCIC:* I will ask you once more. Nicely.

Buffett:* SCREW. YOU.

FCIC: (issues subpoena).

Which is interesting, but this gets better as Tyler Durden at Zero Hedge notes that this investigation “obviously revolve[s] around Buffett … Moody’s is merely a smokescreen.”

Fascinating.

*possibly not a direct quote

Saturday, May 8, 2010 9:12 pm

Moody’s: Dead rating agency walking?

The SEC has filed a Wells notice, the company disclosed last night, which means that it intends to get a legal order for Moody’s to stop rating securities.

Which is kind of what Moody’s does, so I can see how this might put a crimp in their business plan, not to mention be of interest to stockholders.

Inflated ratings on mortgage-backed securities were one of the key mechanisms by which a lot of wealth was stolen and a lot of damage done to the economy in recent years. So I would like to think that this is only the first drop in a hellstorm that will culminate in lengthy prison sentences for senior Moody’s executives in one of those prisons that doesn’t have a single blade of grass in the exercise yard.

Of course, I also would like to think that when I wake up tomorrow there will be a third tap at my kitchen sink that will dispense Natty Greene’s Buckshot Amber, but that probably ain’t gonna happen, either.

UPDATE: The same day Moody’s got its Wells notice, the CEO dumped a bunch of stock. I’m with Gibbs: I don’t believe in coincidences.

UPDATE: Also unloading Moody’s stock that fateful day? Warren Buffett.

Thursday, May 6, 2010 12:10 am

Slightly unrigging a rigged game

Filed under: I want my money back. — Lex @ 12:10 am
Tags: , , ,

Sen. Al Franken wants the SEC to set up a panel that would assign securities to a ratings agency to be rated, rather than letting the investment banks that issue those securities go ratings-shopping, as happens now. It ain’t perfect, but people who know a lot more about this than I do, like economist Dean Baker, say it would work.

Sunday, November 22, 2009 10:10 am

His judgment cometh, and that right early not a damn second too soon

We wouldn’t be in the situation we’re in now without the credit-rating agencies — Standard & Poor’s, Moody’s and Fitch. And people are beginning to figure that out:

Already facing a spate of private lawsuits, the legal troubles of the country’s largest credit rating agencies deepened on Friday when the attorney general of Ohio sued Moody’s Investors Service, Standard & Poor’s and Fitch, claiming that they had cost state retirement and pension funds some $457 million by approving high-risk Wall Street securities that went bust in the financial collapse.

The case could test whether the agencies’ ratings are constitutionally protected as a form of free speech.

The lawsuit asserts that Moody’s, Standard & Poor’s and Fitch were in league with the banks and other issuers, helping to create an assortment of exotic financial instruments that led to a disastrous bubble in the housing market.

“We believe that the credit rating agencies, in exchange for fees, departed from their objective, neutral role as arbiters,” the attorney general, Richard Cordray, said at a news conference. “At minimum, they were aiding and abetting misconduct by issuers.”

He accused the companies of selling their integrity to the highest bidder.

Remember, we’re dealing with a setup in which companies pay the ratings agencies to rate their stuff. No conflict of interest there.

And I’d like to think that this will be a slam dunk for the plaintiffs. But the system is so rigged that I suspect it won’t. Hell, if a TV station can’t be held liable for broadcasting false news, what makes you think a bankster is going to have to pay a dime for screwing people?

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