September 27, 2007

Uh, a little late boys: SEC investigating mortgage ratings agencies. Toxic mortgages rated AAA actually should have been ZZZZZZZZZZZZZZZ. Oopsie!

Strangest thing to see the SEC FINALLY get off their duffs and do a bit of work. Your government at work folks. Investigating how Moody's and S&P gamed the system and lost billions for investors AFTER the fact, is, well, incompetent at best and corrupt at worst.

The ratings agencies were employed by CDO bundlers to rate the toxic mortgage CDO bundles. The better the rating, the more work they got, the more they got paid.

Triple A!!! AAA!!!! Safest investment on the planet!!!! (Now pay us)


Man, after China and governments around the world realize how bad they got schooled in this mess, they're gonna be PISSED!!! Too bad they didn't read HousingPANIC...

SEC looks at ‘influence’ in credit ratings

The SEC is investigating whether issuers and underwriters of residential mortgage-backed securities “unduly influenced” credit-ratings agencies to give them higher ratings than warranted, SEC Chairman Christopher Cox said today at a Senate Banking Committee hearing.

The agencies have blamed the unexpectedly large incidence of mortgage delinquencies in the last year on factors including fraud in mortgage originations, deterioration of loan underwriting standards and a faster-than-anticipated adoption of more restrictive lending standards, which made it difficult for overleveraged borrowers to refinance, he said.


Anonymous said...

Ya think? Perhaps they realized articles such as this one, where Fitch formally admits they simply invented their DTI's.. were just a tad wrong?

And companies wonder why SOX was passed. Sheesh.

Anonymous said...

SEC is the front man. Protection racket.

Looked the other way during the height of the graft orgy 1990s tech bubble.

Ditto re: identity of single buyer who purchased truckload of put options on UAL and AA prior to 09/11/01.


Anonymous said...

You can't legislate ethics.

Anonymous said...

thank george bush and the GREEDY OLD PARTY

Anonymous said...

Yeah, I'm sure the ratings agencies are really worried. The so-called investigation will go something like this:

SEC: Did you guys game the system?
Ratings agency guy: Nope.
SEC: Not even a little?
RAG: Nope
SEC: Are you sure that all those millions of dollars in fees didn't influence your ratings one little bit?
RAG: Nope
SEC: Ok, I think we're done here then. Thanks, sorry to bother you.

Anonymous said...

Now my imitation of the ratings agency guys in front of the Conressional hearings:

Congressman: We're concerned about Americans losing thier homes, we're concerned about foreclosures, we're concerned about..blah blah blah
Ratings agency CEO: We did everything right. It was those greedy Chinese guys that confused us with all that money. By the way, would you like another massive campaign contribution, Mr Congressman?
Congressman: Yeah, ok, sure, thanks. Now, go away, and be good from now on, ok?

Anonymous said...

Oh please. This is classic bureaucratic coverup. They're "investigating" now because every single investment bank and trader knows the reality.

This isn't (only) because they are incompetent.

If they had investigated two or three years ago, as they should have, then they would have been seriously interfering with bankers' enormous bonuses and tremendous profits.

You can bet some Congressman would have gotten some calls from some big campaign donors who were very "unhappy" about the "anti-free-market regulatory attitudes of the SEC". They'd call up their WSJ editors, always reliable class advocates for the hyper-rich parasitical classes, who'd call them alGoreist jealous socialist bureaucrats.

Now, nobody's bonuses are at risk any more by the SEC 'exposing' what everybody who matters already knows.

Of course the rating agencies --- less powerful by far than the banks --- will get harangued and shafted, when the banks who encouraged all this for their fat profits will get off playing the innocent victim!

Exactly like real estate appraisers (often trying to be ethical) will be slammed soon for "bubble inflation" when of course mortage brokers and realtors alike shopped around for the appraiser who would 'hit the number to make the deal go through'.

It is exactly with the rating agencies. They had to 'hit the rating to make the deal go through' or they get no business.

"What? Us? Manipulating raters for fee income? Oh we mice would NEVER do that! We're just poor poor unsophisticated naive victims of those heartless and incompetent Moodys and S&P.

"And oh yes we do deserve to pay only 15% tax on $30 million income."

Anonymous said...

How could the rating agencies rate these junk loans AAA when they were for most part based on a new model of 'Real Estate always goes up "? Certainly these rating agencies didn't think that a borrower putting no down ,stating income, and starting on a teaser rate was anything but the highest risk loan a lender could make .

These loans were a joke in terms of prudent lending practice .

The whole world wide real estate ponzi scheme was funded by Wall Street.You would of thought the rating agencies would of questions fraud in lending when the affordability numbers reached a all time high in 2002 .