Moody’s to U.S.: Drop Dead

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The renowned rating agency, which somehow missed the insolvency of Wall Street's fraud factories, has downgraded the creditworthiness of every local government in the country.

Moody’s to U.S.: Drop Dead


Moody’s to U.S.: Drop Dead

The bank frauds that brought the financial system to its knees have been the object of public scorn for several months.

They have been paraded before Congressional committees; their obscene compensation packages have been the subject of continuous public outrage; they have been TARPed, TALFed and stress-tested; the mountain of toxic assets they built continues to loom over all of us like a stinking planetary landfill.

Yet standing behind these disgraced barons of finance are a faceless group of villains with nary a scratch on them. Their complicity in the global fiscal calamity cannot be disputed, but they continue to function as respected oracles and arbiters of the fiscal landscape.

It is not an exaggeration to say that without the major credit rating agencies—Standard and Poor’s, Moody’s and Fitch, to name the biggest—the financial catastrophe that destroyed the global economy last fall likely would have been avoided.

It was their pristine AAA ratings that put the seal of approval on the exotic speculative financial instruments that brought down the global banking system. Toxic mortgage-backed securities were bundled with solvent loans by the bank criminals and spoon-fed to other banks and investors all over the world. Everyone opened wide and feasted as soon as they saw the big triple-A from the rating titans.

So what happens to a rating agency that is exposed to everyone on the planet as a corrupt fraud with zero credibility? Since credibility is at the core of its business model, one would assume that it would cease to exist, or at least be relegated to calculating the value of ’56 Chevys on the streets of Havana.

One would be wrong. The rating agencies are still in business. Last week, one of them put on a noisy display of reminding us how big and powerful it remains.

Moody’s cleared its throat and downgraded its credit rating for every municipal government in the United States.

The same people who told us last summer that Lehman Brothers was only stopping to pick up some ice for its $1,000 bottles of Cristal now are warning us to stay away from municipal bonds, once thought to be the safest investment haven.

The same people who facilitated trillions of dollars in bad debt tied to fraudulently priced mortgages in the overheated real estate market are warning us not to invest in our towns and cities.

The same people who destroyed our immediate future are telling us not to believe that the communities in which we live have any future. Or, to put it in Moody-speak, the creditworthiness of the good old U.S.A. has been ”assigned a negative outlook.”

So Moody’s is still in the rating biz. Well, here’s something we’d like them to rate:

We suggest they send their analysts to every medium-security prison in the United States. Let them measure the cells, try out the cots, eat the prison food.

While they are busy assessing the value of these facilities, we’ll have the warden sneak up behind them and lock them in.

We’ll call these rating fakes ”prisoner no. AAA.” As to when they might get sprung, well, from where we sit the outlook is going to be negative for a long, long time.

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