(Via John Cole)
As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.Is there nothing we can do about this? I mean, is there no way to have a kind of Center for Economics in the Public Interest (like CSPI except, ya know, for economics, and without the anti-corn-syrup loons?).
A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.
Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets."
Apparently the people who are supposed to be rating these things cannot be trusted. Is there any way to either (a) establish a rating institution that can be trusted or (b) basically divest ourselves from this bullshit?
I've never cared about financial matters at this level, so I know nothing about this nonsense.