Charles Schumer

Moody’s Waited A Year Before Fixing Ratings

We’re surprised as you are to hear ourselves parroting New York senator Charles Schumer but that’s what it’s come to: the truly shocking thing about yesterday’s Financial Times report on Moody’s screwing up the ratings on complex debt derivatives is that it took Moody’s nearly a year to fix the problem after it was discovered.
“The ratings inaccuracies that were disclosed are deeply troubling,” Schumer wrote in a letter sent to the Securities and Exchange Commission yesterday. “However, the fact that Moody’s only downgraded these incorrectly rated products in January of 2008, nearly a full year after they became aware of the problem, is much worse, and is indicative of a culture of shirking responsibility that must end.”
Moody’s says it has employed Sullivan & Cromwell, the white shoe law firm right next door to Goldman Sachs, to conduct an external review. That’s wonderful but, again, why did it take a report from the Financial Times to prompt the review?
Moody’s launches review in wake of errors [Financial Times]

crutches&kilt.jpgEarlier this week, you’ll recall, if you read this site, we regurgitated the news that Bloomberg and the Schumster had issued a report heralding the death of Wall Street. “60,000 jobs” and “$25 billion” and the need for “looser European-style regulations” and “F Sarbanes-Oxley” was the gist of it (we think—we kind of just glossed over it). Today the New York Times and FT both run “everybody calm down, it’s not going to be that bad” pieces, suggesting that, while New York won’t be the God of All Things Financial anymore, it’s not going to hell in the hand basket Mikey and Chuck would have us believe.
At NYT, Jenny Anderson writes:

Like London’s, all markets can always be improved. And the United States markets are in need of improving. There is near-unanimous agreement that Section 404 has had dire unintended consequences. Global investment banks could lower the high I.P.O. fees they charge in the United States. The federal government could fix immigration issues so that people can flow more easily into and out of New York.
But New York will also have to accept that it will be a leader among global financial centers rather than the leader.

At FT, Richard Beales comments:

Talk of New York’s demise as a financial centre is absurdly premature…

We’re not here to make trouble (that’s a lie) and Anderson and Beales generally sound like they know what’s up, but if New York isn’t in trouble then why did Eliot Spitzer essentially read the report, get up, and jump ship? The guy who, up until a few days ago, could be counted on to nail Wall Street’s inhabitants for J-walking and public urination (we actually agree with the vigor of his prosecution on the latter). Doesn’t his sudden and radical departure mean we really are up to our necks in feces? It’s got to. It’s like if John Carney were to—and this is just a for instance—endlessly go on about the wonders of Jameson then suddenly stopped drinking…

From: John Carney
To: us, among others, who have a vested interest in his drinking habits
[yada, yada, yada]
-C-bombs
PPS: If you really want to know more about what it’s like to be laid-up with lots of broken bones and pain, well it’s no big deal. Really. But there’s no loot, there’s no booze and it’s no fun. But the Tossers said it better than I can. See for yourself below.
http://www.youtube.com/watch?v=SOVgNIp0EeU

On second thought, maybe Anderson and Beale are right that Wall Street’s not dead—it’s just got a few broken bones.
About Those Fears of Wall Street’s Decline… [NYT]
On Wall Street: New York’s thicket of complicated rules [FT]

Bloomberg-Schumer Smack Spitzer Around

eliotspitzerfullofair.jpgProfessor Larry E. Ribstein points out a sentence in that Bloomberg-Schumer article we discussed earlier that got us all going “on snap!.”

While our regulatory bodies are often competing to be the toughest cop on the street, the British regulatory body seems to be more collaborative and solutions-oriented.

Hear that, Eliot? Your tough guy act is even pissing off your fellow Democrats now. (Oh, and emphasis added by us, of course.)