FINALLY, THE RATERS ARE GETTING RATED

I've written many times before about the fraud and dishonesty practiced by the big ratings agencies (S&P, Moody's, Fitch) during the housing bubble and it looks like the word about this is reaching the general public. Susie Madrak at Crooks & Liars has a nice clip of Charlie Gasparino calling out the agencies and I'm sure her post will help spread the news. McClatchy also did an article on how Moody's went to the Dark Side.

This seems to be the best news because it takes away part of an excuse the ratings agencies used to hide behind:

Moody’s, S&P Lose Free-Speech Bid to End Fraud Suit (Update5)

By Joel Rosenblatt and David Glovin

Sept. 3 (Bloomberg) -- A U.S. judge refused to dismiss a lawsuit against Moody’s Investors Service Inc. and Standard & Poor’s, rejecting arguments that investors can’t sue over deceptive ratings of private-placement notes because those opinions are protected by free-speech rights.

U.S. District Judge Shira Scheindlin in New York rejected the ratings firms’ arguments yesterday, forcing them and Morgan Stanley, which was also sued, to respond to fraud charges in a class-action by investors claiming the raters hid the risks of securities linked to subprime mortgages.


Without ruling on the merits of the lawsuit, the judge also said opinions by the ratings companies may be the basis for a lawsuit “if the speaker does not genuinely and reasonably believe it or if it is without basis in fact.”