Meme alert: Ratings agencies as victims
It must be an election year. Andrew Cuomo is working overtime, expanding his probe of financial hanky-panky on Wall Street, apparently to come to the rescue of its co-conspirators victims:
The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.
The rating agencies served as the handmaidens to Wall Street firms slapping triple-A ratings on mortgage-based derivative deals faster than you can shout, “Next!” Imprimaturs from Standard & Poor’s and Moody’s (major stakeholder: Warren Buffett) enabled many municipalities and pensions seeking top-rated investments to buy collateralized debt obligations (CDOs) that later turned out to be drek.
Apparently the rating agencies were so busy taking fees from Wall Street that they didn’t have time to check for duping, duplicity, or just plain daffiness. Last month, an anonymous source explained to the Times:
“If you dug into it, if you had the time, you would see errors that magically favored the banker,” said one former ratings executive, who like other former employees, asked not to be identified, given the controversy surrounding the industry. “If they had the time, they would fix it, but we were so overwhelmed.”
And here’s further evidence of victimhood: Turncoats who presumably distracted former colleagues from The Truth. Goldman Sachs (the firm America loves to hate the most) wooed and won Shin Yukawa, a former Fitch Ratings employee, by offering a million dollar package, the Times explains. Three others bolted to sell-side firms. And if that weren’t proof enough, Yukawa worked on the Abacus 2007-AC1 deal at the heart of the SEC and criminal probes into Goldman. And we thought the “fab Fabrice” was behind that deal. Apparently he had help.
I would like to know from you, dear readers, what you think our friend Andrew Cuomo is up to. What benefit is there to the presumptive Democratic candidate for NY State governor in re-casting the ratings agencies as victims in the CDO blow-ups? Is it because the rating agencies were exempt from liability for wrong-headed ratings decisions? Is it because he knows, as former head of the Housing and Urban Department, that it’s all too possible to make bad credit decisions? Memory refresher: Back in the late 1990s early aughts, Cuomo championed extending FHA-backed loans to people who couldn’t really afford to buy homes. Was he duped back then as well?