Well now. The US Senate is about to disclose e-mail evidence showing that “executives from Standard & Poor’s and Moody’s Investors Service acknowledge compromising the integrity of ratings to win business from big Wall Street firms.” And:
Another e-mail to be unveiled at Friday’s hearing features a Standard & Poor’s employee angrily complaining to a Morgan Stanley banker about ratings agencies being played off of each other.
“How many millions does Morgan Stanley pay us in the greater scheme of things? How many times have I accommodated you on tight deals? Neer, Hill, Yoo, Garzia, Nager, May, Miteva, Benson, Erdman all think I am helpful, no?” the employee said, naming all the Morgan executives who’d received accommodative ratings.
It’s always nice to be vindicated (see below).
I seem to recall an email from one broker to another during the Big Crash when the first guy said that a CDO could have been structured by a cow and they’d have sold it. Apparently as long as it was structured by the Merrill Lynch bull, Moody’s and S&P would have rated it.
None of this is surprising. And yeah, it’s nice to be vindicated, but wouldn’t you rather have been wrong??
Sure. What I really don’t understand is how the compensation scheme developed without the SIPC or the SEC ever saying “Wait, there’s an inherent conflict of interest here. It has to be changed.”