Those rating agency internal emails will be on display today at a Senate hearing to determine the extent of their role in the housing crisis.
What is written in them is said to reveal what many suspected: Folks inside ratings agencies well knew they were putting gold stars on garbage.
The New York Times obtained a few of the emails ahead of the hearing (some of which were published a couple of years ago). Here’s what they have to say.
“Rating agencies continue to create an even bigger monster — the CDO market,” one S.&P. employee wrote another in December 2006. “Let’s hope we are all wealthy and retired by the time this house of card falters.”
An S&P employee in April 2006: “We rate every deal. It could be structured by cows and we would rate it.”
A Moody’s employee in April 2006: “I am getting serious pushback from Goldman on a deal that they want to go to market with today.”
A Moody’s employee in August 2006: “They’ve become so beholden to their top issuers for revenue they have all developed a kind of Stockholm syndrome which they mistakenly tag as Customer Value creation.”
The ratings agencies look ridiculous here. The fact that these happened in 2006 shows just how early some employees realised the disaster ahead.
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