“Structured By Cows” IM Revealed

The House Oversight Committee today grilled the credit agencies for their role in the subprime crisis, revealing the official instant message between Standard & Poors employees, and it doesn’t help the ratings agency in the credit crisis blame game.

I’m sure Rahul Dilip Shah and Shannon Mooney didn’t think their casual conversation that includes the topics of naps and trash talking on colleagues would ever be at the center of an economic crisis. Here’s the link, and here’s the conversation:

Shah: btw-that deal is ridiculous

Mooney: I know right… model def does not capture half of the risk

Shah: we should not be rating it

Mooney: we rate every deal. It could be structured by cows and we would rate it

Shah: but there’s a lot of risk associated with it – I personally don’t feel comfy signing off as a committee member

Kudos to someone for having some integrity and standing up to the profit-chasing ethics-bending ratings agencies. It’s moot now (or should I say, mooooot), but I wonder if Shah eventually signed off or not.

CNBC also quoted Jerome Fons of Moody’s, saying the ratings agency was focused on “maximizing revenues” and making the firm more “issuer friendly.”

Not to mention, here is Devin Sharma of S&P’s testimony:

Let me state upfront that we recognize that many of the
forecasts we used in our ratings analysis of certain structured finance
securities have not been borne out. We have reflected on the significance
of these events and are committed to doing our part to enhance transparency
and confidence in the markets.