Sunday, August 24, 2008
Rating Agency Scapegoats
"Four executives at Standard & Poor's Rating Services are expected to leave the company as part of a broader management shake-up, people familiar with the matter said. All four had key management roles in businesses that have come under scrutiny as regulators examine why S&P and its rivals rated mortgage bonds too highly and then were too slow to downgrade some of these securites when the housing market began to suffer. ... Gale ... Scott wrote an August 2004 email suggesting that satisfying bond issuers was a factor in S&P's ratings criteria when the housing market was booming. The email was cited in a [SEC] report in July that criticized the practices by the ratings industry. Ms. Scott was not identified in the published report", Aaron Lucchetti at the WSJ, 13 August 2008.
It's nice that S&P will make four sacrifices to the SEC propriety god to attempt to avoid liability for this mess. I hope S&P gets sued and pays plenty. See my 29 July 2008 post for the SEC's report.