Posted on 07/18/2009 7:55:46 AM PDT by LowCountryJoe
But Dan Alpert, founder of the boutique investment bank Westwood Capital, thinks CalPERS has a case: “The ratings agencies took liberties here they never should have” when they handed out AAA ratings on securities backed by subprime mortgages, among other other risky housing-related securities, he says.
Alpert believes the agencies lost their way as “gatekeepers” during the halcyon days and ignored warning signs the housing bubble was about to burst. “Consequently, they are at risk right now for lawsuits on a whole variety of cases,” he says. The CalPERS suit is “just the tip of the iceberg.”
Beyond Moody’s, Fitch and S&P’s parent McGraw-Hill, Alpert thinks the legal fallout could spread to the Wall Street firms that created these toxic assets in the first place. “Goldman Sachs at $150 -- one might say, what’s risk they face going forward in litigation risk?,” Alpert muses. Because “the amounts at stake here were in the trillions…the damages may be immense.”
(Excerpt) Read more at finance.yahoo.com ...
You can’t get blood from a stone. The ratings agencies were wrong. Their screwups (fraud?) certainly affected my investment decisions - for the worse I might add. But there’s nothing to be had from them. Short of proven fraud, CalPERS is wasting time and money.
Talk about losers attempting to mask their own incompetence.
The notion that the ratings agencies are to blame for this mess is laughable. Only a complete idiot would have made the investments CalPERS has made, irrespective what the ratings agencies said.
Calpers is nothing if not a whiner. I’d be really surprised to learn that the rating agencies never published some kind of disclaimer.
But of course, they’ll never find fault with the real designers of this catastrophe — Congress and it’s oversight of Fannie/Freddie. (No money in it.)
But looking back won't get the money back. Looking towards the future, the suit might serve to deter such behavior in the future.
The rating agencies should be sued civilly and criminal charges should be brought against them. They put triple AAA ratings on garbage just to get fees.
They also knew where to place their own "investments" and when to take the profits and get out.
I read about the rating services role in the financial crisis last Fall as things began to break into the news. Had been wondering why things were so quiet on this front for so long. Of course, their entire net worth wouldn’t make up a fraction of 1% of what has been lost in asset value.
But if they were closing their eyes to reality, or even accepting payment for good ratings (as some have claimed), they should pay a stiff price as they totally failed in the function they claimed to provide.
Yup.
Rating agencies should carry insurance in case they are wrong. The better their assessments, the lower the cost. The market then finds an equilibrium between oversight costs and pooled risk mitigation. We don't need the SEC.
Wonder if the insurer is AIG?
That's the problem - no shortage of rabbit holes in today's financial markets. You fall back on the insurance and you find that is insolvent as well.
That's only part of the point. The "big players" are SO big and so few, no one can either scrutinize them or back them. We've let nearly every market approach oligopoly. The reason they get so big is that they (or their "assets") are for the most part securitized by government. No free-market enterprise with the rest of the community looking over their shoulder would assume financial responsibility of such a scale.
Several of the ratings agencies are owned by publishing companies. There’s gold in them thar hills...
Why should the managers of an investment porfolio trust the rating agencies soley? Why did they not perform their own independent analysis?
Rating agencies should carry insurance in case they are wrong.
A post so flippant and ignorant I'm not going to address it.
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