You're watching...
Former SEC enforcement attorney Ron Geffner on the SEC suing S&P over pre-crisis mortgage ratings.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Well the day of reckoning may finally be here for ratings companies the US Justice Department filing suit against S&P over its role.
And the mortgage crisis.
-- To date we have identified more than five billion dollars in such losses resulting from CDOs that were raided by.
S&P between march and October 2007.
During this period nearly every single mortgage backed CDO that was rated by S&P.
Not only on performed.
But fails.
And the smoking gun in this case may turn out to be an ill advised parody of the famous Talking Heads song burning down on the house.
Court documents refer to an unidentified analyst performing an update parity.
Of the eighties hit while co workers lap and homeowners and investors were losing billions we are driven out of -- -- enforcement attorney -- got -- not had a financial services.
As data single Bergen and this this analysts to mean this is part of a lawsuit that has been -- against S&P these comments.
Burning down a house -- homes were being lost across those countries that does that criminal activity.
-- -- -- -- -- video now I've seen some other horrible performances in the marketplace it's obviously bad judgment should you judge accompanied by the bad judgment of one -- handful of people.
I'm not really sure if it's if it's reflective of the mind set of all the of all of the analysts.
And the people managing the institution that it can be telling.
But they can't -- he did say after the case of the video around yelled if you really want to talk to because CB -- assume you know translation I don't wanna put us.
-- not -- Eric Holder attorney general Eric holder's news coming -- -- this is not you know politically motivated.
But I I do ask your opinions and think this this politically.
Motivated this move in the S&P the only agency the downgraded.
The US credit rating when they were specifically told not to.
But based on my time -- us at the SEC.
Any of the actions I was investigating or involved in bringing.
None of them more ever politically motivated if anybody ever had a conflict in connection with the matter.
They were preclude her from being involved so I would find it hard to believe that there's a giant conspiracy theory that's being driven by the US government.
I can't quiet why not Moody's right now why desist and he -- hot commodities as an independence.
I couldn't begin to tell what what they have -- emails internally whether the people S&P I had -- had more email savers had more.
We're -- -- wasn't at Moody's or Fitch might have half.
You think that that there might be other agencies and I find it hard to believe that if you're gonna blame one it.
And not all three of -- they would all seem to be in the same what defense strategy do you think essence he's gonna come up let you know obviously besides the need easy answer there's no case and eleven -- what would.
What what -- defense strategy be for a small the ones.
Had come up that really are now no longer holding must first freedom of speech or that we gave some general overview and there's nothing specific that anybody can hang our hat on.
And in and of itself if you if you had -- information which you knew to be true.
And you'd.
Publish something otherwise.
Then you'd be in trouble but in this case if they believe that they have information and they can -- that -- files as of that time in history was reflective of any bad information that would be my defense.
But I did liable if they -- they did and in fact deviate from internal controls and that will put in place at the time I mean does that.
Does that mean that's have a -- reliable -- for what the DOJ is certain and.
-- things more than just their internal procedures.
I would think as a defense if I had competent ventures they were disclosed if I had internal procedures and I follow them that would be the best line of defense.
But there are a lot of different 2000 we're not getting into -- remarks that so in other words procedures would -- you've done that I'd imagine.
A quality review of all the underlying information.
And it and it's being suggested.
That there was pressure to put up positive reviews to.
-- the revenue of the company -- -- Well -- if you look at the chart performance 2007 and now if you look at the stock performance of S&P -- it -- kind of you can't because -- questions out there will be he would definitely Beijing to make these names and one obvious.
And one of the other pieces of noise is a function how they on boarded you know each of the issuers as well right -- -- thank you very much as single but thank you -- good idea announcement and the sap.
