Monday, August 03, 2009
Charlie Gasparino's take-down of Matt Tiabbi and his Rolling Stone article about evil Goldman Sachs contains the following paragraph about getting the blessing of the ratings agencies for subprime mortgages and shorting those same securities.
Later, he went as far as to say that Goldman likely committed "securities fraud" because it later shorted the same mortgage bonds tied to subprime loans after it knew that billions it underwrote all those years were going bad (try proving that one), and that Goldman somehow forced the bond raters—Moody's, Standard & Poor's, and Fitch—to place all those Triple-A ratings on subprime bonds. (Given the huge fees for rating mortgage debt, I know for a fact that Goldman hardly had to twist any arms on this one.)The childish "try proving that one" rebuttal to the securities fraud allegation aside, it is the logic regarding the ratings agencies that escapes me here...
There can be no coercion so long as the one who's purportedly doing the coercing is paying the other party huge fees?
And the fact that Goldman paid huge fees for the ratings it wanted and got is OK?
Nothing to see here? Move along?