THE SPINE MAY 22, 2008
Moody's (about which I've posted a few times) has announced that "The integrity of our ratings and rating methodologies is extremely important to us, and we take seriously the questions"...blah, blah, blah. Actually, there are three full Financial Times articles (one in the lead position on the front page), two of which authored were authored by a trio (Sam Jones, Gillian Tett and Paul J. Davies) and the other written by the last of the three alone explaining how a computer error at Moody's sparked the international calamity attached to Constant Proportion Debt Obligations (CPDOs).Yeah, yeah, and the same error was made at Fitch's and S&P. And, beyond these, MBIA (about which I've also posted and in which I have confessed that I hold a sizable short stake, despite an accusation in Barron's that I haven't) and its compatriot fakers and exploiters like Ambac somehow trusted the ratings and for a while made zillions off them until...well, you until things began to collapse.This scandal has been known to some investors on Wall Street (among them Pershing Square management, on whose board I sit) which have been sounding the alarum for as long as five years and even more broadly two. Under duress and panicked by Barney Frank and Chris Dodd, Moody's has begun a review of its evaluating methodologies. But Moody's and the other companies in cahoots with it have on several occasions announced studies of their procedures. This is "promises, promises" and about utter contempt for the ordinary investor public and mortgagee who got snared in the euphoria.