While Hooey-Peddling Agencies Are Rewarded
The big 3 government backed ratings agencies (technically known as Nationally Recognized Statistical Rating Organization) – S&P, Moody’s and Fitch – all committed massive fraud, which was a prime cause of the 2008 economic crash.
They took bribes for higher ratings, “sold their soul“, engaged in a “culture of covering up improper ratings“, and said that anyone who believed them was an idiot. And see this.
They also played games to avoid downgrading U.S. credit. Basically, they scratched the government’s back, so the government scratched their back.
On the other hand, government-backed rating agency Egan-Jones has consistently been more honest and forthright in its ratings of countries and corporations, and more aggressive than Moody’s or S&P in downgrading U.S. credit (and see this).
So guess which rating agency just got stripped for a year and a half of its government-backed rating agency status?
Yup … Egan-Jones.
Given that the government’s whole strategy in dealing with the financial crisis is to cover up the fraud (the “financial reform” legislation didn’t do anything much to reform rating agency shenanigans), honesty cannot go unpunished.
Postscript: It is possible that Egan-Jones did something wrong. But given that the main business model of S&P, Moody’s and Fitch is fraud – and Egan-Jones is in general much more objective and honest – it is clear that Egan-Jones was singled out and punished because of its cynicism as to the creditworthiness of the U.S. and its favored sons, such as the big banks.
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