The Role Of The Credit Raters In The Meltdown

Very interesting story here about the role of corporate culture at the credit rating agencies, one that drove analysts to continue to provide higher investment ratings on vehicles and products then their analysis would support--because of the fear of lost profits from those whose products were being rated.

We had a very well-informed caller on the show Wednesday night speak at length of the role of the credit rating agencies in the melt-down, and this article seems to back some of that up.

When I think of financial industry reform, I always talk about reforms that make the market "more free". In this case, the fact that these ratings agencies were very likely rating these vehicles improperly to support their own bottom lines--favored one side of a market transaction over the other. This is not a free market. Here is where government could have a salutary role in regulating the activities of the ratings agencies.

Porn Caused the Melt-down

At last, we have it. We now know what caused the financial crisis. No, it wasn't a lack of regulatory authority. No, it wasn't a lack of regulators. No, it wasn't a lack of rules with which to regulate.

Turns out SEC folks were too busy surfin' porn.

Nice.

He Saw The Melt-Down Coming....

...and he asks why others didn't. Good question, interesting article.

Portrait of TARP-Man

I've said several times in this blog that the only thing that government did (Bush or Obama) in the midst of the financial melt-down that actually had ANYTHING concrete to do with the current recovery was the bank bail-out--otherwise known as TARP. Moving to ensure liquidity and keep the system from imploding upon itself set the basis for the slow unwinding of the markets we've seen since March. House Republicans walking away from the initial version of it was a dark day for the party.

In this WaPost portrait--Neel Kashkari--the man Hank Paulson called upon to devise and administer TARP--is featured. This is the story of a man who worked his ass off for the good of the country, only to be savaged by the preening ponies of the Congress. Kashkari has dropped out of site to the woods of Northern California to rebuild himself, his marriage, and his life. This is a man who deserves praise for a job well-done.