Remember Henry Blodget? He was the Merrill Lynch analyst who acquired notoriety during the dotcom bubble when his email showed that he was having views on stocks that conflicted with what ML put out officially for its clients.
Well, credit rating agencies appear to be facing the same problem. Jaimini Bhagwati, writing in BS,quotes a manager at S&P as sending an email to a colleague saying that the 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”. (Source: Summary Report of Issues Identified by the Securities and Exchange Commission Staff’s Examinations of Select Rating Agencies dated July 2008).
As investigations into failed institutions continue, we can expect to see more such email. Strange that financial sector employees don't learn from mistakes made in the past even in elementary matters. The operating rule should have been: never express opinions over email.
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To all the blog visitors:
The Summary report is available at
http://www.sec.gov/news/studies/2008/craexamination070808.pdf
Its 39 pages in all and makes a good read.
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