Joel Rosenblatt and David Glovin report for Bloomberg that a federal judge refuse to dismiss a lawsuit against Moodys and Standard & Poors.
Good for him!
The lawsuit alleges the ratings agencies hid the risks of securities backed by sub-prime mortgages, so called SIVs, for Special Investment Vehicle.
Duh.
They should have been called Special Rip-off Vehicle.
The defense? Hey, that was just our opinion.
Of course, the opinion coincided with the financial gain of the companies pushing the securities, who, by the way, were the ones paying for the opinions.
And paid three times the normal rate for these special opinions, according to the suit.
Wonder if that was disclosed to the suckers, uh, investors?
You bet investors were suckered.
Many of these securities were rated just under U. S. government debt.
Iceland and Norway’s pension system are already bankrupt from having believed the ratings agencies and bought the crap.
This was not a failure of capitalism, this was criminal fraud inspired by greed.
And it should be so treated.
Suit Against Agencies That Rated Mortgage Backed Securities Survives
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