Matt Taibbi, Sausage-Making, and the Bond Rating Agencies

Short and sweet today. Gotta pack for the Association of Certified Fraud Examiners global annual conference in Las Vegas next week – Andy Fastow (one of the King Weasels of Enron infamy) is among the keynote speakers, and it promises to be an interesting week interacting with auditors and fraud investigation professionals from all over the world. More to come as events unfold.

Today’s main rage-inducing topic is yet another excellent article from Matt “Vampire Squid” Taibbi in Rolling Stone. If you haven’t read the previous RS articles or his 2010 book Griftopiado yourself a favor and get familiar. 

His latest article helps clean up some odds-n-ends from the various polemics he’s written over the past few years, and he focuses a lot of his laser-sharp analysis on some of my least-favorite entities in the universe – the ratings agencies. Taibbi frames his story with emails and other documentary evidence of the epic greed and dishonesty that was (is) endemic within the likes of Standard & Poor’s, Moody’s, et al. Just to give you a taste of the outrageous shit these cats were getting away with during the insanity of the MBS/derivatives tulip mania, here’s an internal S&P email Taibbi quotes:

“Lord help our fucking scam . . . this has to be the stupidest place I have worked at,” writes one Standard & Poor’s executive. “As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it,” confesses a high-ranking S&P analyst. “If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value,” complains another senior S&P man. “Let’s hope we are all wealthy and retired by the time this house of card[s] falters,” ruminates one more.

Read more: 

There HAS to be a reckoning for the ratings agencies. Let’s see if anyone in Washington has the political will to bring them to task. I can’t say I’m overly optimistic, and I’m hearing anecdotal evidence that new bubbles are forming as we speak.

Have a great weekend, I’ll report in from Vegas as the conference kicks off!Image



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