US Ratings Agencies Accepted Cash for High Ratings

[cybercoma]

Ratings agencies helped cause the financial meltdown. New evidence shows that agencies like Moody's and Standard and Poor's were accepting money to give fraudulent ratings. Now I've seen people here and elsewhere say that homeowners should have been more conscious of the loans and mortgages they were taking, but what responsibility do you put on the financial specialists that are responsible for this crisis? These ratings agencies were taking money from banks in exchange for giving high ratings. They lied and just made up BS numbers. And they did it for money. The banks and the ratings agencies gamed the system for profit, then when it all collapsed they took the taxpayers' money because they're "too big to fail." In a series of emails you can see executives admitting their guilt.

"Lord help our [expletive] scam . . . this has to be the stupidest place I have worked at," writes one Standard & Poor's executive. "As you know, I had difficulties explaining 'HOW' we got to those numbers since there is no science behind it," confesses a high-ranking S&P analyst. "If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value," complains another senior S&P man. "Let's hope we are all wealthy and retired by the time this house of card falters," ruminates one more.

Read the full article here:

The Last Mystery of the Financial Crisis

[bush_cheney2004]

If you don't make your mortgage payments, the bank will foreclose on the house. This was true long before any ratings agency fraud.

[cybercoma]

And is also completely irrelevant to this thread.

[bush_cheney2004]

And is also completely irrelevant to this thread.

Then why did you bring it up?

[GostHacked]

And is also completely irrelevant to this thread.

He knows it is not relevant, hence the reason he is posting.

Everything about that housing crisis was manufactured right from the start it seems. The mortgages were repackaged and sold off as derivatives. Many repackaged investments tanked, but the bank who originally gave the mortgage is no longer responsible for the deliberate devaluing of the home. SnP skewers the ratings for some banks, meaning those banks should not have been involved in such risky business anyways.

The homeowner is left with a bunk mortgage, will never get out of debt, and the banks get rewarded with bail outs for screwing over homeowners.

The ratings were bunk, the mortgages were bunk, the whole financial system is bunk.

[kimmy]

If an automobile inspector certified a car to be safe to drive and it was later discovered that the inspector hadn't inspected the car at all and had certified the car to be safe because the guy selling the car paid him to certify it safe, that inspector is going to be doing jail time. "Buyer beware, LOL!" isn't going to cut it. Buyer beware remains excellent advice, but it does not get that automobile inspector off the hook for being a willing participant in fraud.

These bond rating agencies were also willing participants in fraud. No amount of trying to shift the blame elsewhere can change that.

Normally I would think there's a snowball's chance in hell that Obama's spineless lackeys would do anything about it, but with all the PR trouble Obama has had of late, stringing up a few Wall Street fraudsters might be a way to get some good press for a change.

-k

[bush_cheney2004]

If an automobile inspector certified a car to be safe to drive and it was later discovered that the inspector hadn't inspected the car at all and had certified the car to be safe because the guy selling the car paid him to certify it safe, that inspector is going to be doing jail time. "Buyer beware, LOL!" isn't going to cut it. Buyer beware remains excellent advice, but it does not get that automobile inspector off the hook for being a willing participant in fraud.

Not sure if this analogy works...."car inspectors (???)" would be liable for the fraud but not necessarily all or even part of the car's safety or road worthiness. Responsibility for safe operation and maintenance of a motor vehicle still resides mostly with the owner/operator, unless negligence or design flaws can be proven in court. Also, civil liability is different from criminal liability.

Read the fine print for a home inspection report contract and you will find little or no liability beyond the cost of the inspection unless an additional premium or insurance is paid.

[kimmy]

The auto inspector was a willing participant in fraud even if the car doesn't get in a crash at all. The buyer of the car doesn't need to get crippled or killed for there to have been a crime committed.

As for Moody's and S&P, they've already spent hundreds of millions of dollars on out-of-court settlements for fraud lawsuits, so it appears that their faith in their innocence isn't quite as unshakeable as your faith in their innocence. The DOJ has a fraud lawsuit lined up against S&P. With the quotes from the article Cybercoma provided, it looks like an open-shut case.

And it's just hard for me to believe that these lawsuits are strong enough to convinced these firms to spend hundreds of millions of dollars on settlements, yet there apparently isn't enough evidence to lay criminal charges against anybody. Does that seem right?

-k

[bush_cheney2004]

As for Moody's and S&P, they've already spent hundreds of millions of dollars on out-of-court settlements for fraud lawsuits, so it appears that their faith in their innocence isn't quite as unshakeable as your faith in their innocence. The DOJ has a fraud lawsuit lined up against S&P. With the quotes from the article Cybercoma provided, it looks like an open-shut case.

It has nothing to do with "innocence" at all...settlements are made all the time in civil cases. Justice will have a tough time winning a fraud case against S&P...money will change hands...and the game will continue.

[Argus]

If you don't make your mortgage payments, the bank will foreclose on the house. This was true long before any ratings agency fraud.

This an oft repeated tome by those who don't give a damn. The fact is that even if you made your mortgage you got screwed. Some people made their mortgage payments only to find out the company had re-sold their mortage without telling them, sometimes to multiple buyers, and yet hadn't passed on the payments. Now they have to have lawyers to fight off foreclosure.

Then there are those, often older, poorer and uneducated, who were talked into remortgaging their homes by slick talking salesmen at a low initial rate ... a rate which rose very precipitously over time. And others who were talked into a mortgage they couldn't afford by more slick talking salesmen who assured them the numbers worked. Again, they worked until a year or six months later when the mortgage rate doubled. It's all very well to say they should have read the fine print, but older people and uneducated people are going to get caught by that.

And let's not forget the millions who did their homework, bought a house they could afford, and then when the market plummeted, found their $400k house was now worth $200k. Are they going to continue making payments on that $350k they borrowed for it, or just give up the house?

[Argus]

It has nothing to do with "innocence" at all...settlements are made all the time in civil cases. Justice will have a tough time winning a fraud case against S&P...money will change hands...and the game will continue.

He said, rubbing his hands in glee at the thought of all those poor people getting screwed and killing themselves.

[bush_cheney2004]

He said, rubbing his hands in glee at the thought of all those poor people getting screwed and killing themselves.

You would have better luck stoking your hatred for Quebec instead of fighting for the "older, poor, and uneducated" in the U.S. Suicide rate is the same in Canada.....must be the God-awful television programming.

Nobody has the right to secured or unsecured credit, and that includes the not so poor, highly educated, and rich younger people too.

Edited June 29, 2013 by bush_cheney2004

[kimmy]

Why are you so determined to shift the focus away from the credit agencies and towards home owners? Do you have shares in S&P as well?

-k

[bush_cheney2004]

Because "homeowners" are far more legally responsible for their financial affairs than ratings agencies, and the opening post invoked "homeowners" as part of the narrative. Any other questions ?

[GostHacked]

Why are you so determined to shift the focus away from the credit agencies and towards home owners? Do you have shares in S&P as well?

-k

Quantity over quality of posts. Not sure.

And yes the inspector is definitely on the hook. Certifies a car and if there is a failure causing an accident and possible death, that is on the inspector and not the vehicle owner. The inspection would have caught the issue causing the accident.

Certain members like to shift focus from the crime and debate menial things related to the story. It' on purpose, but yet it goes on and on and one. They might be criminals themselves, thieves and just general asshats.

We see it play out here, and we see it play out in the media. Still think the media is not conditioning millions of stupid people in order to get them debating a real asinine part of the topic and not focus on the real story itself?

The deliberate attempts at this are getting more and more obvious. Obvious to the point now where people who have not paid attention to this fiasco are saying WTF?

Banks, mortgage lenders, ratings agencies, investment companies were all in on the take, they all worked against the homeowner who many bought in good faith and in good standing. This market is for them, and not the homeowner.

Buyer beware that the market is purposefully screwing you in the ass, and very very hard.

[GostHacked]

Because "homeowners" are far more legally responsible for their financial affairs than ratings agencies, and the opening post invoked "homeowners" as part of the narrative. Any other questions ?

I think you need a bigger boat. You need a trawler now. Trolling is just simply way below you now that you have reached this stage.

[kimmy]

Because "homeowners" are far more legally responsible for their financial affairs than ratings agencies, and the opening post invoked "homeowners" as part of the narrative. Any other questions ?

The homeowners were not the victims of the credit agencies. The victims of this scam were all the investors and pension plans and mutual funds who bought these sham securities on the "AAA" recommendations of S&P and Moody's.

In short, you've completely and utterly missed the point.

-k

[bush_cheney2004]

The homeowners were not the victims of the credit agencies. The victims of this scam were all the investors and pension plans and mutual funds who bought these sham securities on the "AAA" recommendations of S&P and Moody's.

In short, you've completely and utterly missed the point.

Even the most novice investor knows the inherent risk in buying securities or mutual funds. Apparently, THEY utterly missed the point. THEY also had no problem profiting and granting huge pension benefits on the way up.

[kimmy]

Even the most novice investor knows the inherent risk in buying securities or mutual funds. Apparently, THEY utterly missed the point. THEY also had no problem profiting and granting huge pension benefits on the way up.

Accepting money to give phony "AAA" ratings to securities they knew were garbage makes these agencies participants in fraud. There'll be more massive settlements, and hopefully jail time as well. Sell your stocks soon.

-k

[bush_cheney2004]

Accepting money to give phony "AAA" ratings to securities they knew were garbage makes these agencies participants in fraud. There'll be more massive settlements, and hopefully jail time as well. Sell your stocks soon.

Meh...just the price of doing business. I went all in when the Dow went below 7,000 and rode it all the way to 14,000. If this is how "fraud" works, can we have more please ?