Late last evening, Senator Carl Levin released a report of his investigation into the financial crisis entitled “Wall Street And The Financial Crisis: Anatomy Of A Financial Collapse.” The majority of the blame goes toward investment banks, particularly Goldman Sachs (described by Levin- no relation- as “a financial snake pit rife with greed, conflicts of interest, and wrongdoing”), as well as Deutsche Bank, whose former trader, Greg Lippmann (he of “I’m short your house” and sushi spreadsheet fame) gets a lot of airtime. Also criticized are the ratings agencies, who Levin says “weakened their standards as each compete to provide the most favorable rating to win business and greater market share.” To that end, the Senator from Michigan illustrates his point with a story about Standard & Poor’s and UBS.
In this anecdote, the characters are two S&P analysts, James Yao of UBS, Vertical ABS CDO 2007-1, and an attitude the ratings agency did not appreciate.
Oh yeah, the analysts were pissed something fierce and they had a right mind to tell James to go fuck himself. Nobody pushes Standard & Poor’s around! Unless you’re paying in which case, do whatever you want to us and we’ll go along with it.
But just know that we will be having a conversation internally about how your attitude needs adjusting or else something will be done. Seriously. Take this threat seriously. We’re serious. Going to stop talking now so I can put this ball gag in my mouth like you asked but remember what we said.
This would never happen at Meredith Whitney Credit Ratings.
S&P team reminds me of Donald Sutherland in Animal House. “UBS, your payments don’t relieve you of your responsibility… Hey, I’m serious! This is my job!”
A rating agency reminds me of a bad cook. No recipe, just a hodgepodge of different herbs and spices (= debt review = no clue what they are analyzing) and the client gets a serious case of heartburn or worse as a result. What started out as a necessary step to protect investors has turned into a group of individuals, who combined, could not fight their way out of a wet paper bag.
That’s right – - because no one would pay for your bullshit, headline-grabbing work which lacks a morsel of substance.
-Master of the obvious
Looks like the S&P analysts were swimming naked when the tide went out. That’s why I’m long Moody’s. Because at the end of the day, it’s not who the S&P analysts are sleeping with, it’s who the Moody’s analysts are sleeping with – me. I have no interest in saving sex for old age like Munger.
- W. Buffett
S&P makes Ashley Dupre look very respectable.
where’s elliott spitzer when you need him???
I can set my watch by the UBS sucks news here. It’s eerie.
-that guy with the multicolored Swatch watch from 1985
tl;dr
- UBS Analyst
To Sum:
1) UBSs does crap modeling
2) UBS pays for the crap rating
3) S&P analysts Flip Hamburgers
-Sounds like a great business franchise
This is a very odd example for someone trying to show how the banks influenced the ratings. Is there any evidence that there was, in fact, no mistake in the modeling that ultimately allowed the equity tranche to be rated investment grade? Or are we supposed to just assumed that the mistake was created to push it throgh the process? Because these emails make the S&P analysts seem a lot more diligent and resentful of the structurers than I would have given them credit for. Maybe it was the models that were flawed.
My takeaway was UBS sucks.
um… pot.. you’re also black.
-kettle
Kinda painful when the most entertaining comment on a post is “UBS sucks”…still, it’s better than nothing.