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McGraw Hill Financial, Inc. Message Board

  • googliscious googliscious Feb 7, 2013 11:03 AM Flag

    How can you possibly single out and fault S&P when Moody's and Fitch had the EXACT SAME RATINGS on CDO's/bonds?

    Makes zero sense and it will be impossible to convince a jury that there was actual FRAUD, which the government must prove to make a case.

    If an analyst rates a stock Strong Buy and you buy it based on their rating, and it suddenly collapses on some bad news, can you sue that analyst for the money you lost on the stock? Of course not!

    The only way it would be considered fraud is if MHP and MCO were selling and profiting from the bonds that they were rating AAA, which they weren't of course. So two huge hurdles for government's case here: MHP wasn't profiting from selling AAA bonds, the ratings given to CDO's were in-line with other rating agencies, and there was no precedent for the steep and sudden decline in US house prices. S&P was the first to start downgrading CDO's containing RMBS which puts another kink in the government's case against the company.

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    • Uh hello, you can sue a analyst for materially false reports, fraud is fraud. proving it may be difficult, unless there are company emails showing otherwise.

    • hedhall Feb 7, 2013 12:12 PM Flag

      You answered your own question. S&P was offering investment grade ratings to issuers for a fee in order to maintain their revenue and management bonus objectives. Fitch and Moody's execs did the same. There was no rigor in their ratings and investors who relied on these ratings got hurt- some went BK. Executives at all these firms should have their bonuses clawed back and face criminal charges. Unfortunately Holder and the rest of the incompetents at the justice department are only interested in plucking the low hanging $ fruit in a civil action. Current MHS shareholders are going to be punished but not the perpetrators of the crimes.

      • 1 Reply to hedhall
      • The perpetrators were every person who bought a house assuming the price, no matter how high, could only go up further. Not the banks that gave you the loan that you begged for, not the ratings companies that said these mortgages were good if the price of the house kept going up, not the fictional 'bad' executives that profited from selling thse products, you have to just look at the people that actually just kept paying, more, and more, and more, for a home because they figured they could only make money on the deal. Who exactly is supposed to tell you that you paid too much for a home? Personal responsibility would go a long way if taken but why do that when we can blame some other 'evil' entity that 'facilitated' your own stupidity.

    • Because S&P was the first to downgrade U.S. debt back in August of 2011. That seems to be the most likely reason

      Sentiment: Strong Buy

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