One of the most frustrating things about the Standard and Poor’s (S&P) U.S. debt downgrade is that S&P is part of the problem, as I’ve described before. They really aren’t studious evaluators of evidence, untouched by the profit motive or ideology. They are venal hacks, as Matt Stoller reminds us of what came to light about S&P in 2008 during the aftermath of Big Shitpile (aka the housing crisis and other fun stuff):
Indeed, of all the players in the financial crisis, the ratings agencies were the single most embarrassing and obvious points of failure and corruption. Why did all the toxic crap get AAA ratings? Because S&P, Moody’s, etc. basically got paid for each AAA rating. Were these companies actually apologetic after blowing up the economy? Ha! Here’s testimony to the House Financial Services Committee in 2009 by S&P President Deven Sharma.
Mr. Chairman and members of the Subcommittee let me assure you of two things. First, our ratings in the mortgage-backed securities area were not venal. These were honest views expressed based on the best information available, dealing with complex instruments.
Erm, about the venality thing:
This conversation by two S&P analysts was released by the House Oversight and Government Reform Committee in 2008.
Rahul Dilip Shah: btw: that deal is ridiculous
Shannon Mooney: I know right … model def does not capture half of the risk
Rahul Dilip Shah: we should not be rating it
Shannon Mooney: we rate every deal… it could be structured by cows and we would rate it
This stuff came out in 2008. In 2009, S&P’s President got up in front of a Congressional committee and said that her company’s ratings were honest and not venal. And nothing happened! S&P still keeps going as if they are a credible institution!
Seriously, this is why all of that ‘looking forward, not back‘ crapola is so toxic. These jokers shouldn’t be taken seriously. Yet, by not finishing them off when we had the chance, they not only have survived, but are stronger for it. At this point, how could they possibly know any fear? They have been exposed as incompetent and dishonest…yet we still must take their pronouncements seriously.