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Author: lindytoes Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 59075  
Subject: Financial Reform’s Triple “F” Date: 2/26/2013 8:19 PM
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http://blog.alfranken.com/2013/02/26/the-american-prospect-f...
The American Prospect: Financial Reform’s Triple “F” Rating
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Earlier this month, the Justice Department and 16 state attorneys general sued the Standard and Poor’s (S&P) credit-rating agency, accusing the company of improperly inflating the ratings of 40 collateralized debt obligations (CDOs)—essentially, securities made up of other mortgage-backed securities—at the height of the housing bubble. According to the suit, S&P misled investors by rating the risky securities as “triple-A,” super-safe investments. But the purchases turned into massive investor losses when the bonds failed after the bubble collapsed. Using emails and other communications, state, and federal prosecutors will seek to prove that S&P knew the securities were junk but rated them highly for the most obvious of reasons: to make more money.
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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48112 of 59075
Subject: Re: Financial Reform’s Triple “FR Date: 2/26/2013 9:45 PM
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Earlier this month, the Justice Department and 16 state attorneys general sued the Standard and Poor’s (S&P) credit-rating agency, accusing the company of improperly inflating the ratings of 40 collateralized debt obligations (CDOs)—essentially, securities made up of other mortgage-backed securities—at the height of the housing bubble. According to the suit, S&P misled investors by rating the risky securities as “triple-A,” super-safe investments.

I don't understand the problem. All S&P did was look at mortgages given to people with crappy credit that were then bundled up into esoteric financial instruments that very few people understood and no one had any experience with. And then they concluded these things were just as safe as U.S. government bonds.

I mean, that's a perfectly logical conclusion, right?

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