How the rating agencies helped to screw us - Barney Frank asks for Bonus freeze - that's the only approach

Excerpt:
http://www.cnbc.com/id/27321998

In a hearing today before the House Oversight Committee, the credit rating agencies are being portrayed as profit-hungry institutions that would give any deal their blessing for the right price.

Case in point: this instant message exchange between two unidentified Standard & Poor's officials about a mortgage-backed security deal on 4/5/2007:

Official #1: Btw (by the way) that deal is ridiculous.

Official #2: I know right...model def (definitely) does not capture half the risk.

Official #1: We should not be rating it.

Official #2: We rate every deal. It could be structured by cows and we would rate it.

The CEO of Moody's Mr.McDaniel is obviously lying - privately he said the competition puts the entire financial system under risk

Excerpt from Bloomberg:

Frank Calls for `Moratorium' on Wall Street Bonuses (Update1)

By Christine Harper and Alison Vekshin

Oct. 22 (Bloomberg) -- House Financial Services Committee Chairman Barney Frank said there should be a freeze on Wall Street bonuses until companies find a way to keep the year-end payouts from encouraging excessive risk-taking.

``There should be a moratorium on bonuses,'' Frank, a Massachusetts Democrat, told reporters yesterday in Washington. ``They have a negative incentive effect because they are the ones that say if you take a risk and it pays off you get a big bonus,'' and if it causes losses ``you don't lose anything.''

The five biggest U.S. securities firms paid out a record $39 billion in bonuses last year even as the credit crisis began to affect investments in mortgage securities and leveraged loans. One of the firms, Lehman Brothers Holdings Inc., went bankrupt this year and two others, Merrill Lynch & Co. and Bear Stearns Cos., were rescued in emergency sales. The two largest firms, Goldman Sachs Group Inc. and Morgan Stanley, became bank holding companies and are receiving $10 billion each of government money.

An act of an humble apology of Wall Street would be to offer that - it's a disgrace they did not already declare that on their own. John Mack made in Q4 of last year a capital raise with preferred stocks and used that money to pay out 20% higher bonuses last year at Morgan Stanley although the problems were obvious - that alone is a case for a criminal investigation. Imagine with Hilary Clinton as President he would have been the likely next Secretary of Treasury - just to remind you that job is in high demand by CEO's of Wall Street because you can get rid of all yous stocks without paying any taxes - that's how we got Mr. Paulson plus he has quite some insights and can place more Goldman buddies on crucial spots in the administration. Not only governments need intelligence services.