What happened to the economy? Without accountability corruption thrives. And there is still no accountability.
Read about one part of it — how ratings agency executives got rich from knowingly giving toxic debt the highest possible ratings, paid to do so by the investment banks that also got rich (and then bailed out): How Moody’s sold its ratings — and sold out investors. Read the whole thing to understand it but it’s about a corrupt bargain between the regulators at the SEC and other agencies the executives at Moody’s and the executives at investment banks, letting them all get away with giving junk debt the highest ratings.
McCleskey had raised concerns about the integrity of the ratings process, and Moody’s had excluded him from meetings in January 2008 with the Securities and Exchange Commission about the eroding quality of pools of subprime loans that Moody’s had blessed with top ratings.
SEC officials, however, didn’t bother to seek out McCleskey, even though he was the “designated compliance officer” in company filings with the agency. The SEC maintains that its officials met with Kanef because he was McCleskey’s superior.
. . . Others who worked at Moody’s at the time described a culture of willful ignorance in which executives knew how far lending standards had fallen and that they were giving top ratings to risky products.
“I could see it coming at the tail end of 2006, but it was too late. You knew it was just insane,” said one former Moody’s manager. “They certainly weren’t going to do anything to mess with the revenue machine.”
Moody’s wasn’t alone in ignoring the mounting problems. It wasn’t even first among competitors. The financial industry newsletter Asset-Backed Alert found that Standard & Poor’s participated in 1,962 deals in 2006 involving pools of loans, while Moody’s did 1,697. In 2005, Standard & Poor’s did 1,754 deals to Moody’s 1,120. Fitch was well behind both.
What happened to the economy? Simple answer, executives engaged in corrupt schemes that made themselves millions upon millions, and eventually destroyed the companies and the economy around them. Here is the thing: this was not a bad plan, it was a good plan — because they got rich and got away with it.
So far not one big corporate executive or investment banker is being prosecuted for fraud or anything else. No one is asking for the money back. No one is asking for accountability. In fact, in many cases, many of them were bailed out by the government and are still getting huge salaries and bonuses.
They got rich – really rich – castles in Europe, three ocean-going yachts and a private Boeing 767 rich. And got clean away with it. Many barely even pay taxes. So what message does that send about whether this is the right thing to do?
Without accountability corruption thrives. Our current government has made it clear they believe it is wrong to look back, point fingers, assign blame, etc. So it continues and will continue.
Oh, and torture, launching illegal wars and spying on Americans will be back, too, if Republicans get in again, because no one is being held accountable for that, either.