Bond Raters

Finally there is some action against the bond raters, S&P,and Moody's.
The CT Attorney General, Richard Blumenthal has charged them with knowingly assigning false ratings to complex investments that helped push the country into deep recession.

Early on in the meltdown I questioned the liability of the raters for their AAA ratings of the risky mortgages that were securitized into bonds and sold internationally. Why it has taken so long for this to come out is still a puzzle. Several pension funds have lost many hundreds of thousands of dollars due to the misrepresentation. The raters claim it was a case of meeting the competition for the business. They were paid handsomely for the AAA ratings and to me that makes them culpable in a fraudulent scheme.

In Ohio a similar case was brought. There the judge ruled the raters were not liable for obscure reasons. That seems a miscarriage of justice to me. The raters more or less confessed to not checking the products involved and their motive was simply the profitable business they obtained without regard to the consequences for investors who relied on their ratings. Hopefully that ruling will be overturned by a higher court.