The "Pliant Corporate Citizen" - aka - when it rains it's probably because the storm began brewing awhile ago.

So, here we are again, on the subject of the SEC. It goes without saying that, in the context of everything said in prior posts, I've got grievances against how the SEC works. If America's economy had "managerial" capitalism then a lot of things going on wouldn't be happening if regulation really existed.

So there's another news break, but this time from Moody's. A whistleblower of sorts has come forward with a massive 80pg "comment" he wrote to the SEC about the corruption at Moody's (pot calling kettle, kettle come in please). This comment sparked interest at Business Insider who's done most of the leg work already in the sense that they've extracted the useful bits for those who don't want to tear through it all on their own.

• Moody's ratings often do not reflect its analysts' private conclusions. Instead, rating committees privately conclude that certain securities deserve certain ratings--but then vote with management to give the securities the higher ratings that issuer clients want.
• Moody's management and "compliance" officers do everything possible to make issuer clients happy--and they view analysts who do not do the same as "troublesome." Management employs a variety of tactics to transform these troublesome analysts into "pliant corporate citizens" who have Moody's best interests at heart.
• Moody's product managers participate in--and vote on--ratings decisions. These product managers are the same people who are directly responsible for keeping clients happy and growing Moody's business.
• At least one senior executive lied under oath at the hearings into rating agency conduct. Another executive, who Harrington says exemplified management's emphasis on giving issuers what they wanted, skipped the hearings altogether.

A lot of the above sounds like symptoms of the well-known fact that Moody's existed to take money from a client, tell the client what their product was worth, and then the client used that rating to sell it. Obviously there's a huge conflict of interest if you're giving objective ratings like "this is a piece of crap, you should be ashamed to try to sell it" because if you do then your clients, and your clients are quite few, are not likely to come back. So you give the client what they want by taking their financial product to the financial Maaco (for those who don't know, Maaco is a company famous in the US for offering very cheap paint / body work for cars...and it's not known for quality) where they slap a fresh shiny paint of bullshit on the product that lasts just long enough for the bank to resell it and get rid of it before the paint starts peeling.

Business Insider reached out to Moody's to get a comment, but unsurprisingly Moody's never returned the phone calls. If there's one thing Wall Street knows it's that any news that comes out on Friday is "take out the trash day" (hat tip to Aaron Sorkin for that West Wing episode) because everyone dumps all of their unpleasant news on Friday so that hopefully it gets lost in the noise, and even if it doesn't, there's a full weekend of time for some other distracting bit to come up and make people not care. Want an example of distraction? Take the phone hacking scandal at News of the World in the UK - then the riots happened - notice anyone talking about News of the World anymore?

Welcome to your short attention span society. Context matters people. The biggest gift you can ever give to yourself is to read things, step back, and put it into a broader perspective / narrative. At least for this writer - it's how I survive.