Ratings Emails Show Concerns at Rating Firms Over Goldman’s Abacus Deals
The dead bodies keep surfacing. It’s now clear the ratings agencies, who were paid for impartial evaluations of Goldman’s Abacus and other CDO deals, had serious qualms. Here are a few sound bites from rating-agency e-mails quoted in today’s Wall Street Journal:
- “Screwing with criteria to ‘get the deal’ is putting the entire S&P franchise at risk—it’s a bad idea.”
- Another from August 2006 says raters have “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.”
- “Another S&P email regarding one Abacus deal says, ‘not only have these trades consumed tons of my time, but they have generated an enormous amount of stress since I’m the one that has to break the news that these trades are wrong … which makes us look like idiots.”
Even if Goldman wins the SEC lawsuit, the victory will be pyrrhic. And frankly, there are so many reports of bad behavior that everyone in finance will lose: Goldman, banks, ratings agencies, and hedge funds.
You know there’s a problem when ratings agencies use “Stockholm syndrome” in the same sentence as “Customer Value.”
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