Hillary Clinton’s Wall Street Reform Plan Leaves Credit Rating Agencies Untouched

[marmar]

http://www.truthdig.com/eartotheground/item/hillary_clintons_wall_street_reform_plan_leaves_credit_rating_20160113


via truthdig:



“Clinton’s vision of financial reform neglects one part of the industry everyone agrees was an essential factor in the 2008 crisis: the credit rating agencies, which assess the worthiness of Wall Street securities for investors,” writes David Dayen at The Intercept.

Dayen continues:

Hillary Clinton’s response to Bernie Sanders’s plan to aggressively break up the big banks responsible for the financial crisis is to suggest that he is naive.

“My plan also goes beyond the biggest banks to include the whole financial sector,” Clinton wrote in a New York Times op-ed in December. “My plan is more comprehensive,” she said at the first Democratic debate in October — and for that reason, “frankly, it’s tougher.” (…)

Sanders’s plan, released last week, would no longer allow the companies that issue securities to pick which rating agency they use — a simple but outrageous practice that creates an enormous conflict of interest and helps facilitate fraud.

The heart of Clinton’s pitch on Wall Street is that she recognizes all potential hazards. But there is not one word in her big reform plan about the rating agencies.

Read more here.

—Posted by Alexander Reed Kelly.

[WillyT]

1. HUGE K & R !!! - Thank You !!!

[underthematrix]

2. Only a five year old believes it's all or nothing

[R. Daneel Olivaw]

3. Hey!!!

Cut it out.

[CorporatistNation]

6. Cannot Wait For Wall Street talk In This Debate... Clinton Inc. Has No Place to Hide!

Bernie will very politely dispatch his opponent Sunday...

[mmonk]

4. A big part of the fraud part.

[retrowire]

5. But she'll go after those scary shadow banks!!! ooooOOOOooooOOO!! nt

[Divernan]

7. Absolutely true about ratings agencies & fraud

My daughter was an analyst for Standard & Poors. Although she was not involved with the sub-prime mortgage bonds, she knew what was going on with them. Told me that if S&P gave a poor rating, the client/company could bury it and just go to another ratings agency. In other words the poor rating was never made public. Since the agencies competed with each other for business, they quickly learned to give inflated ratings.

More from the OP link:

The ludicrousness of the current system was brilliantly depicted in The Big Short, the Oscar-contending comedy about the financial collapse. In a pivotal scene, Melissa Leo (sporting comically large eyeglasses, above) plays an employee of Standard & Poor’s, one of the three biggest ratings agencies.

She explains to Steve Carell (as hedge fund manager Mark Baum) why S&P continues to give AAA ratings (connoting no risk of default) to mortgage-backed securities composed of junk loans: If they didn’t, the issuers would just go to their competitors, Moody’s and Fitch. Investors use those ratings to make decisions about what bonds to buy. But because the banks that issue securities pay for the ratings, the ratings agencies have a significant financial incentive to grant high ratings in order to attract more business.

This is not just true in the movies. The Financial Crisis Inquiry Commission found that the ratings agencies “were key enablers of the financial meltdown,” inflating ratings and giving investors false confidence that mortgage-backed securities were safe. Trillions of dollars in rotten securities “could not have been marketed and sold without their seal of approval,” the FCIC said.

The bipartisan Senate Permanent Subcommittee on Investigations agreed, finding that over 90 percent of subprime mortgage bonds given AAA ratings in 2006 and 2007 were eventually downgraded to junk status. Investigators uncovered an emblematic message from an S&P analyst speaking to their diligence: “We rate every deal. … It could be structured by cows and we would rate it.”

And Hillary wouldn't address this issue? Either she and her high- powered financial advisors are total idiots (which I doubt) or they've been bought off. Quelle surprise!