Investing

The SEC And The Credit Rating Agencies, Better Profits Through Cheating (MCO)(MHP)

"I am shocked, shocked to see that gambling is going on in here,"–Captain Renault, "Casablanca: 1942

Of course, Captain Renault controlled the gambling in Casablanca, but it was best that, as the chief of police, he not admit that. Something similar happened at the big credit agencies including S&P and Moody’s. They were supposed to be honest brokers of opinions about paper like mortgage-backed securities. They neglected to fulfill that obligation. They may have been busy making buckets of money for themselves, perhaps in ways that compromised their judgments.

According to The Wall Street Journal, the SEC did a major investigation of how the credit rating agencies had been run. The paper writes "The 10-month examination uncovered poor disclosure practices, a lack of policies and procedures guiding the analysis of mortgage-related debt, and insufficient attention paid to managing conflicts of interests," Among those conflicts of interest where that analysts knew how their firms were paid by clients. Makes objectivity a little harder.

The SEC report is probably not the end of it. The document is likely to be used as evidence in a number of lawsuits against the rating firms. Banks and their clients lost billions of dollars by betting wrong on mortgage-backed paper. They relied on S&P and its peers for opinions instead of handling the due diligence themselves.

It is the American way. Someone lost money so someone has to pay.

Douglas A. McIntyre

Travel Cards Are Getting Too Good To Ignore

Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.

We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.

It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.

We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.

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