lies damn lies and AAA ratings

Standard & Poor’s, as you may have heard, is fighting a federal lawsuit with a potentially 10-figure pricetag that accuses it of making up whatever CDO ratings it had to in order to win business rating CDOs. Its defense against these charges are (a) no one should listen to them and (b) that no matter how shady and underhanded their practices seem, the ratings they produced were fine, even if they were totally wrong.

You may note the absence of (c) we did not make up ratings to appease the people who pay for ratings. Which may have something to do with the fact that S&P is still kinda making up ratings to appease the people who pay for them. Read more »

  • 13 May 2010 at 11:19 AM

Ackman: Rating Agencies Should Suffer

You can’t go around rating “shitty deals” AAA and get away with it.

I actually think it would be a good thing for rating agencies if they suffered some consequences for bad opinions.”

“One of the problems is, when you have an institution who is allowed to write opinions that have enormous market impact, but they have no economic – they have an exemption for free speech, it can create some problems.  Rating agencies, in my view, during the credit crisis acted effectively as underwriters. Deals could not get done without their primatur.”

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  • 23 Dec 2009 at 1:13 PM

Oracle Cuts Back As Ratings Agencies Cut Back

buffettblizzard.jpgWarren Buffett’s a pretty moral guy, we think. He’s old, yes, and thinks that railroads are the future as we enter the year 1910. But he isn’t a cheating bastard.
He just invests in them: to wit, his 13% stake in the lying, thieving Moody’s Corp., parent of the august Moody’s Investor Services, one of the three ratings agencies that allowed Wall Street to wrap fresh feces in a couple of mortgages unlikely to default and sell them as gold. But maybe the O is having second thoughts.

Billionaire Warren Buffett’s company is continuing to reduce its stake in credit ratings firm Moody’s Corp., but Berkshire Hathaway Inc. still controls about 13 percent of Moody’s stock….
Over the past nine months, Berkshire has significantly reduced its Moody’s holdings. Berkshire held 48 million shares in March and reduced that stake to 31.8 million as of last week.

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