On a technicality.
While at the same time they bray how awful those agencies were.
Back room deal, anyone?
http://www.huffingtonpost.com/...
Interesting that the photo makes Mary Schapiro look REALLY, REALLY mad.
WASHINGTON — The Securities and Exchange Commission has declined to seek fraud charges against Moody's Investors Services over its ratings of risky investments that led to the financial crisis.
But the SEC said it decided against seeking civil charges only because it determined it lacked authority to charge a foreign affiliate of Moody's.
Can't charge a foreign affiliate so you have to to let the whole fucking outfit go scot free? Sounds like pure bullshit to me, but hey - I'm not an attorney.
Moody's, Standard & Poor's and Fitch Ratings...were discredited in the financial crisis for giving high ratings to risky mortgage securities.
Moody's spokesman Michael Adler said the firm was pleased that the matter was resolved and the SEC wasn't pursuing enforcement action. "We fully support the (SEC's) message that every rating decision must be based only on credit considerations, and we are committed to maintaining robust procedures to ensure that our internal company policies are followed," he said.
Later, at dinner, Schapiro and Adler high-five each other.
"Do you think they bought it?"
"Well there's nothing to counter that on the record. And most of those guys wouldn't know a decent follow-up question if it ran over them with a truck."
http://static1.firedoglake.com/...
A few internal e-mails from the agencies...
"[N]o body gives a straight answer about anything aro1:ll1d here ... how about we come out with
new [criteria] or a new stress and ac[tuJally have clear cut parameters on what the hell we are
supposed to do."
--Instant Message from S&P employee, 510812007, Ex. 30b.
"I would like to discuss how we plan on ultimately 'spinning' our revised correlation
assumptions [regarding the model]."
--Email from S&P employee, 3/0412005, Subject: "R£: FW: Wachovia Report Cites Questions of S&P's
Integrity," S&P-SEC-E 401265, Ex. 25.
"Currently, following a methodology change, Moody's does not re-evaluate every outstanding,
affected rating. Instead, it reviews only those obligations that it considers most prone to multinotch
rating changes, in light of the revised rating approach. This decision to selectively review
certain ratings is made due to resource constraints."
--Moody's Structured Finance Credit Committee, 3/3112008, MIS-QCIE-RMBS_095, Ex. 80.
"We spend most of our time keeping each other and our staff calm. Tensions are high. Just too
much work, not enough people, pressure from company, quite a bit of turnover and no
coordination of the non-deal 'stuff' they want us and our staff to do."
--Email from S&P employee, 51212006, Subject: "RE: Change in scheduling/Coaching sessions/Other
stuff," S&P-SEC-E 1152365.
We do not have the resources to support
what we are doing now. A new process, without the right support, would be overwhelming ....
really need to add to staff to keep up with what is going on with sub prime and mortgage
perfonnance in general, NOW."
--Email from S&P Head of Global Surveillance Ernestine Warner to Peter O'Erchia, 2/0312007, Subject:
"RE: Headcount for RMBS Surveillance?I," S&P-SEC-E 1201718, Ex. 86.
"Lehman is proposing an alternative way of calculating haircuts which I think has some merit
Independent models are provided by several banks .... I must recognize that we do not have the
knowledge nor the time to develop our own models."
--Email from Moody's employee, 1210512006, SEC_MOODYS00000052.
"This deal ended up not weak-linking to [Goldman Sachs]. Chui told me that while the three of
us voted 'no', in writing, that there were 4 other 'yes' votes .. . . [T]his is a great example of how
the criteria process is NOT supposed to work. Being out-voted is one thing (and a good thing, in
my view), but being out-voted by mystery voters with no 'logic trail' to refer to is another. ...
Again, this is exactly the kind ofbackroom decision-making that leads to inconsistent criteria,
confused analysts, and pissed-off clients."
--Email fromS&Pemployee.Sll21200S. Subject: "FW: Adirondack COO," S&P-SEC-E 491870, Ex. lOc.
Wink, wink, Nudge, nudge.