Wednesday, October 22, 2008

Financial Scumbags

Quick excerpt from an article I read today between two employees of S&P (a ratings agency) responsible for judging the quality of companies and their financial instruments. They basically decide whether certain bonds are appropriate for certain types of investors, and they WAY overranked a lot of assets resulting in things like money market funds "breaking the buck":

S&P Employee #1: btw-that deal is ridiculous

S&P Employee #2: I know right.. model def does not capture half of the risk

S&P Employee #1: we should not be rating it

S&P Employee #2: we rate every deal

S&P Employee #2: it could be structured by cows and we would rate it

S&P Employee #1: but there’s a lot of risk associated with it – I personally don’t feel comfy signing off as a committee member.

S&P Rated the deal.

It's from Bloomberg originally and I read it here on propublica after seeing it on Fast Money on CNBC.

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