Friday, November 19, 2010

All the Devils are Here; ratings agencies and the financial crisis

Not Japan related directly, unless you consider the damage done to the Japanese (and world's) economy a direct result of the 2008 financial crisis*, but PBS has a short segment on the role of US ratings agencies---Moody's etc---in the crisis. They also discuss the responsibility of the US government, both political parties, and Wall Street. Lesson learned until the next bubble.

*Probably a good thing to consider.

1 comment:

  1. Jeffrey4:44 AM

    Don't get me started or I'll be kicking the cat and she's 14!

    I've never understood why they made such a show trail by grilling various bank executives when the people who really should have swung (and I'm against capital punishment) are the heads for the ratings agencies.

    As Colin Powell is the chief goat in the run-up to the Iraq invasion, the ratings agencies were the primary enablers of the financial debacle. Had they called the proverbial spade a spade, none of those junk bond would have been sold to anyone and the multiplying effect they provided in the financial market never would have occurred.

    Yes, mortgage brokers and banks are equally guilty for approving unqualified borrowers to begin the process, but the first efforts to fob off these worthless loans would have died a quick death if the rating agencies had given the proposed bonds the junk ratings they deserved.