Are These the Real Bad Guys?

Ratings Agencies Next on the Chopping Block?
Bobby Lott

Most people have heard of Standard & Poors, Moody's, and perhaps Fitch. They are the so-called "ratings agencies". It is the job of rating agencies to provide investors with reliable, accurate and unbiased information on the financial state of an organization.

Now, there is a growing movement among attorneys and industry professionals that it was the rating agencies and the conspiracy between them and the banks that caused this $7 trillion collapse of the world economy.

How?

In a Congressional hearing in October of 2008, testimony confirms, according to some, that the rating agencies were in essence acting as consultants and being paid hundreds of millions of dollars to put inflated or deceptive ratings on credit default obligations. Allegedly, both the banks, and the ratings agencies knew these things were "absolutely toxic."

If these allegations are true, that would constitute a clear conflict of interest, since the ratings agencies are charged with being an independent source of information used by investors worldwide. For them to be paid by the companies issuing the securities would be almost certainly fraudulent and actionable.

The big question remaining is - what happened to the money?

More to come.