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They publicly disclosed quite clearly what they do: rate financial products based on the data provided by the products' issuers.
What confuses you about that?
What confuses me is the manner in which you simply dismiss the rating agencies' culpability despite the many facts/comments provided in this thread, including the fact that S&P will pay $1.5 billion to resolve the lawsuits brought against it. I know you dismiss this fact as you do, but that's an awful lot of money to pay for no wrong doing no matter how you want to dismiss that fact. $687.5 million to 19 states and the District of Columbia as well. $125 million settlement with public pension fund California Public Employees’ Retirement System.
Seems it would be easier to simply show these plaintiffs the disclosures, right? Save some money...
S&P signed a statement of facts acknowledging that its executives in 2005 delayed implementing new models that produced more negative ratings.
What confuses me is what these new or old "models" might have looked like that determines these ratings, apparently a bit more involved than simply "rubber stamping" investment securities based on "data provided by the products' issuers."
While you are more inclined to simply declare innocence based on disclosures.
As usual, simple and wrong.
All just for starters, tends to confuse me more than just a little bit...
No one disagree's with that. The banks had the choice to do it right or the way they did it though.
The banks originated loans BOUGHT by those who issued the MBS, e.g. the GSEs. If the MBS issuers didn't believe the banks were originating loans based on the criteria they specified, why did they agree to buy them?
Keep in mind that the Clinton-era HUD's directives to the GSEs was that 50+% of the loans they bought from originators had to be made to low-income, red-lined, and/or credit-compromised borrowers.
Consequently, the Federal Reserve had to create $2 trillion in QE to buy GSE MBS.
What confuses me is the manner in which you simply dismiss the rating agencies' culpability
What culpability?
Exactly HOW are they culpable given the SEC's own admission:
Quote:
"The [SEC] Staff notes that each rating agency publicly disclosed that it did not engage in any due diligence or otherwise seek to verify the accuracy or quality of the loan dataunderlying the RMBS pools they rated during the review period. Each rating agency’s “Code of Conduct” (available on each rating agency’s website) clearly stated that it was under no obligation to perform, and did not perform, due diligence. Each also noted that the assignment of a rating is not a guarantee of the accuracy, completeness, or timeliness of the information relied on in connection with the rating."
Given those PUBLIC DISCLOSURES, where are you mistakenly believing there's any culpability on the part of the ratings agencies?
If Wall Street was the problem, why did the Federal Reserve have to create $2 trillion in QE to buy GSE MBS?
If Wall Street were the problem, wouldn't that $2 trillion have gone to buy Wall Street-issued MBS? It didn't.
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