Wall St. Journal: S&P Email: 'We Should Not Be Rating It'

[marmar]

S&P Email: 'We Should Not Be Rating It'
By AARON LUCCHETTI
August 2, 2008; Page B1

Problems keeping up with the surging growth of mortgage-related debt products were particularly acute at Standard & Poor's Ratings Services, according to a draft version of a Securities and Exchange Commission report on bond-rating firms.

The agency's report, which included unflattering emails, was released July 8 but didn't identify the firms or individuals who wrote the emails. The SEC said that was general practice for an industry review.


Some of the most strongly worded emails from analysts questioning their own ratings came from S&P, according to a draft version of the 38-page report, which includes the firms and was reviewed by The Wall Street Journal. The unit of McGraw-Hill Cos. is the largest bond-rating firm by revenue.

In one email, an S&P analytical staffer emailed another that a mortgage or structured-finance deal was "ridiculous" and that "we should not be rating it." The other S&P staffer replied that "we rate every deal," adding that "it could be structured by cows and we would rate it."

Meanwhile, an analytical manager in the collateralized debt obligations group at S&P told a senior analytical manager in a separate email that "rating agencies continue to create" an "even bigger monster -- the CDO market. Let's hope we are all wealthy and retired by the time this house of cards falters.;O)" ......(more)

The complete piece is at: http://online.wsj.com/article/SB121764476728206967.html?mod=mktw