Did they not learn anything?
I did. What the credit rating agencies did in making up ratings out of thin air because they didn't consider the underlying values of the derivatives is the one massive unregulated fraud that tore me away from Ayn Rand's laissez faire capitalism. As you see in the article, Greenspan was still a member of the Ayn Rand cult, ignoring the warning signs of financial collapse.
NOW COMES Sheila Bair, outgoing chairwoman of the Federal Deposit Insurance Corporation, who says the Credit Rating Agencies are still involved in a massive cover-up.
Sheila Bair’s Bank Shot
By JOE NOCERA
Long viewed as a bureaucratic backwater, the F.D.I.C. has had a tumultuous five years while being transformed under Bair’s stewardship. Not long after she took charge in June 2006, Bair began sounding the alarm about the dangers posed by the explosive growth of subprime mortgages, which she feared would not only ravage neighborhoods when homeowners began to default — as they inevitably did — but also wreak havoc on the banking system. The F.D.I.C. was the only bank regulator in Washington to do so.
During the financial crisis of 2008, Bair insisted that she and her agency have a seat at the table, where she worked — and fought — with Henry Paulson, then the treasury secretary, and Timothy Geithner, the president of the New York Federal Reserve, as they tried to cobble together solutions that would keep the financial system from going over a cliff. She and the F.D.I.C. managed a number of huge failing institutions during the crisis, including IndyMac, Wachovia and Washington Mutual. She was a key player in shaping the Dodd-Frank reform law, especially the part that seeks to forestall future bailouts.
Since the law passed,
...she has made an immense effort to convince Wall Street and the country that the nation’s giant banks — the same ones that required bailouts in 2008 and became known as “too big to fail” institutions — will never again be bailed out, thanks in part to new powers at the F.D.I.C. Just a few months ago, she went so far as to send a letter to Standard & Poor’s, the credit-ratings agency, suggesting that its ratings of the big banks were too high because they reflected an expectation of government support. If a too-big-to-fail bank got into trouble, she wrote, the F.D.I.C. would wind it down, not bail it out.
So the Credit Rating agencies are still giving away a flood of AAA ratings on the premise that the govern,ment will bail them out.
Government, if anything, is UNPREDICTABLE.
But worse - per Sheila Bair said there will never again be bailouts for them.
And The Credit Ratings agancies had to be familiar with the new group at the helm and Bair's opinion.
The Credit Rating Agencies (plus Geithner, Bernanke, etc etc) have said or implied , "well fuck that, we wouldn't want to spook the bondholders," and is still giving the big banks AAA ratings based on a LIE.
Well, here's another nuclear bomb whose fuse has been lit.
7:40 PM PT: UPDATE: I need to get to bed; thanks for stopping by. I'll check in in the am.
Mon Jul 11, 2011 at 9:34 AM PT: Thanks for a lot of interesting comments! I'm too wrapped up in other stuff to get involved much yet; I'll try to get into it later...