Interesting interview with Richard Cordray. A snippet:
Q: What made you go after the rating agencies?
In discussions with our pension system here in Ohio, we had a strong reaction that the rating agencies really were derelict in their duty in terms of how they handled mortgage-backed securities, some of the asset-backed assets, some of the complicated derivative packages where most investors around the country relied heavily on the ratings agencies to do the due-diligence, to really investigate carefully and make a strong and a solid assessment of the risks involved with those securities.
In fact, we believe, as we investigated the matter in bringing the lawsuit, that much of what was done was not up to snuff. In fact, the ratings agencies knew that there was a great deal more risk that their ratings were indicating — the ratings were fraudulent or badly mistaken and that was incentivized by their financial arrangements in the marketplace.
Q: But not much has changed with the rating agencies. What’s the solution?
A: Change has certainly been needed. We’re in the middle of a process where that change is occurring.
I do think that lawsuits that I and other states are bringing will result — we expect — in significant compensation for people who were harmed. That creates a deterrent effect; that helps change behavior. That’s part of the picture. If you’re trying to change behavior, the federal regulators — the SEC and others — and Congress’ ability to write the landscape is going to be critical to the success.
I wouldn’t rely on the Senate to do anything about this. At all.
And for those of you who haven’t seen it yet, apparently President Nelson hasn’t had enough attention yet and is still going to block the Health care bill.
DougL (frmrly: Conservatively Liberal)
I am glad that someone is going after the ratings agencies. They enabled this financial disaster by stamping it AAA+++ right to the very end. They lied and deceived people into investing their hard earned dollars into a huge Ponzi scheme just so they could get their cut of the loot.
I would trust a pathological liar before I would trust one of those crook agencies. They should be shuttered and the criminals fined and jailed.
Don’t forget about CalPERS. I think they’re actually bigger than Ohio.
Good for him.
Went to the Politico link. There’s a 1:30 pm dateline and I have heard several reports since then that did not emphasize the Nelson angle to the extent that Politico does.
Oh, and the comments at Politico:
2nd – “You better not vote for this bill Ben Nelson. You are finished buddy if you vote for this peice [sic] of crap bill. Done.”
4th – “Tell Obama and Harry Reid this shouldn’t be an abortion bill cause that’s what it is. It is an Obama abortion funding bill.”
The only thing getting aborted by this bill are the Democrats’ chances of getting anything meaningful done during this term. I expect the Wicked Witch of the West will be setting Harry Reid on fire after Lieberman, et al are done kicking the stuffing out of him.
I’m not the least bit surprised. And why shouldn’t he extract his pound of flesh? Lieberman has demonstrated there’s no price to be paid for doing so. At this point I’ll be surprised if health care passes at all.
The more I learn about this bill, the more I don’t mind if Nelson does kill it. It amounts to a rather nasty tax increase on the working poor and lower middle class in exchange for some vague promises of good behavior on the part of the insurance industry.
@beltane: Agreed. Except it should be progressives who kill the bill. And they should claim credit for doing so.
If Ben Nelson got attacked by a rouge gorilla in the halls of the Senate tomorrow (a la Pootie Tang), I would be perfectly okay with that.
The Sheriff Is A Ni-
@NR: Because nothing says ‘we care’ like killing off health care reform for another ten to twenty years. A+
This guy knows how the game needs to be played – hit them with huge legal bills, and because they’re guilty of fraud and other securities violations, they’ll end up paying huge settlements. The rating agencies have already lost their primary defense in a US court. The legal system is our last line of defense.
This guy is a Jeopardy winner. I’ll take What Wall Street Cares About for $1000, Alex.
President Nelson, I used to think you were a swell guy. Well, to be honest, I thought you were an imbecile. But then I figured out you WERE a swell guy… A little slow, maybe, but a swell guy. Well, maybe you’re not so slow, But you’re not so swell either. And it looks like you’re an imbecile after all!
Can we trade Nelson and Lieberman straight up for Snowe and Collins?
The ratings agencies def have a good amount of blame in this. But the assets were always there for inspection. You can get, if you’re interested in buying a CDO, the hundreds/thousands of pages of documentation on the underlying assets and loans and inspect them. Nobody put a gun to these folks’ heads and made them invest billions of dollars on shit they didn’t understand, based on a third-party’s thumb’s up. There are investors who make a lot of money on these securities, by actually getting the paperwork and sorting out the ones with solid assets from the ones based on NINJA and interest-only-reset-later loans. The buyers here aren’t innocent victims, they were negligent investors.
The decades-old Warren Buffett rule (and lots of people prior to him, like Ben Graham), is Never invest in a business you don’t understand.” It’s not “Never invest in a business you don’t understand, but which the owner paid a guy to tell you is super-awesome.”
I agree with the criticism of Harry Reid. The fact that he can’t get 60 out of 60 members of his party to do exactly what he wants means that he’s a totally incompetent bozo. That’s a really intelligent, informed criticism, worth serious appreciation and respect. It is not at all a completely, humongously fucking stupid thing to say.
If the ratings were fraudulent (as they obviously were), why can’t homeowners go to a judge and get injunctive relief to void the mortgage foreclosures on the basis that the loans were made on fraudulent grounds?
That would get the banks’ attention and start some reform, I betcha.
That Harry Reid can’t get 60 of 60 members to do his bidding is no surprise at all, since there has never been a real “60” at his disposal. However, the manner in which he’s being picked apart by Lieberman’s Incredible Moving Goalposts and Public Lies, Ben Nelson’s Imitation of Scarlett O’Hara or Hamlet–Who Knows?, the Arsenic and Old Lace Ladies from Maine, and Rahm’s Public Secret Phone Calls telling him to bend over is a humiliation that I’ve not seen a Senate Majority Leader subjected to in my lifetime. Open your fucking eyes. He’s been rendered useless, and no one on either side of the aisle is going to take him seriously on anything after this.
@The Sheriff Is A Ni-: If health care reform were on the table, you would have a point. But it’s not. What’s on the table is a TARP for the insurance industry.
Is it just me, or is the Politico commentariat delving further and further into a cesspit of whackjobs and Neanderthals at a fairly consistent rate? Mouth-breathers flock to that site like flies do to shit.
Some judges in New York are cutting to the chase and telling banks that if they can’t prove that they’re the actual mortgage holder, they can’t put people into foreclosure, because they don’t have the standing:
Fighting Back Against Foreclosure
If Lenders Say ‘The Dog Ate Your Mortgage’
A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style
“And for those of you who haven’t seen it yet, apparently President Nelson hasn’t had enough attention yet and is still going to block the Health care bill.”
And look – all of the centrist fools who actually thought we were somewhere are now surprised.
For the fiftieth time.
The *real bad news* is that we haven’t seen more alleged Dem Senators jump in yet. It’s feeding frnzy time, and Obama isn’t brnging much to this sruggle.
“I agree with the criticism of Harry Reid. The fact that he can’t get 60 out of 60 members of his party to do exactly what he wants means that he’s a totally incompetent bozo. That’s a really intelligent, informed criticism, worth serious appreciation and respect. It is not at all a completely, humongously fucking stupid thing to say.”
Anybody who makes such a criticism is either a fool or a liar.
The point is that Reid has an abysmal track record of getting 60 out of 60 even occasionally, let alone consistently. let alone the majority of the time.
And in this case we’ve been in a successful low-grade mutiny for months. A bunch of Senators take turns saying ‘f*ck you’, and Reid does nothing about it except give them concessions. At which point the next Senator in the mutiny rotation steps up with middle finger raised.
I’m not surprised the Lieberman isn’t leading today’s mutiny, because his middle finger must be awfully tired.
Don’t worry, the Rahmfather will just play dirty Chicago politics with national security to try to get what he wants on health care:
Nice strategic air force base you got there, Nebraska. It would be a shame if something happened to it.
I object to saying the ratings agencies were “derelict in their duty.” This is based on the false premise that their duty was to accurately rate financial instruments. However, under our current model of corporate responsibility, they had only one duty – the maximization of shareholder return. Since their clients could have taken their business to another ratings agency, duty required keeping the clients happy by producing the ratings the clients wanted.