How did bundles of risky loans get 'AAA' ratings?

[RobertB]

Our view on mortgage meltdown: How did bundles of risky loans get 'AAA' ratings?

Wed Sep 5, 12:22 AM ET

Let's see, where have we heard this before? An industry that is supposed to provide independent financial analysis turns out to have a conflict of interest because it receives its fees from the very entities it analyzes.

Maybe it was the accounting firms that failed to spot the cooked books at companies like Enron and WorldCom. Or maybe it was the Wall Street houses that put out "buy" recommendations on wildly overpriced dot-coms that also happened to be investment banking clients.

Now, similar conflicts seem to be appearing at credit rating agencies such as Standard & Poor's and Moody's Investors Service.

http://news.yahoo.com/s/usatoday/20...18DULZxUO2s0NUE

[goinghome]

Our view on mortgage meltdown: How did bundles of risky loans get 'AAA' ratings?

Wed Sep 5, 12:22 AM ET

Let's see, where have we heard this before? An industry that is supposed to provide independent financial analysis turns out to have a conflict of interest because it receives its fees from the very entities it analyzes.

Maybe it was the accounting firms that failed to spot the cooked books at companies like Enron and WorldCom. Or maybe it was the Wall Street houses that put out "buy" recommendations on wildly overpriced dot-coms that also happened to be investment banking clients.

Now, similar conflicts seem to be appearing at credit rating agencies such as Standard & Poor's and Moody's Investors Service.

http://news.yahoo.com/s/usatoday/20...18DULZxUO2s0NUE


This should be no surprise. I've been on boon-doggles with financiers and bankers, and those who have great influence on these ratings. In the energy industry you take them out, spend a lot of money on them, go on fancy trips to outrageous hotels and do outrageously expensive things to entertain them, give them your schpiel about this investment and that plan, and your investor in Paris who has pledged this and that, and suddenly things start to show up on paper. I was just starting out back when oil magnates signed each other's deals over a lot of alcohol and a few call girls. Nothing has changed in 20 years except the way the money is spent to buy their ratings/support. The "clean" ones now use golf, skiing, expensive dining and drinks, exotic locales, and a buddy buddy attitude where they all cover each other's rear ends. Our financial system is a huge joke and the stock market is Vegas on steroids.