Sunday, December 7, 2008

Invincible Wall Street


Remember Arther Andersen, the great accounting firm, built up by years of hard work in a competitive environment? Member of the "Big Seven" and then the "Big Five"?

Well, once they lost public trust, Andersen was brutally punished, as their clients had to leave them.

So why are the ratings agencies, Moody's, S&P, and Fitch all ... doing business as usual?

Sure, the Justice department got involved because AA's Dallas office was exceptionally naughty (in comparison to other auditing fiascoes), but is the business of public accounting - are the goals of public accounting - really that much different than rating agencies?

At least with GAAP, there is a FASB and a public agency, like the SEC, who are subject to public pressure and provide a visible process.

Well, Bloomberg filed a FOIA request on the Fed, but what about the ratings agencies? At a minimum, they should publish their CDO model, their current and historical model assumptions, and their estimation methodology/data to the public, right?

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