Having dragged the world into financial meltdown, ratings agencies are now in the gun with new rules requiring them to provide the Securities and Exchange Commission with data showing past information they passed on to investors. Eric Kolchinsky, a former analyst at Moody's has told CNBC that the agencies were actually contemptuous of the law. "I don't want to overstate this but years and decades of saying we have this first amendment protection has created carelessness towards the law. I think that's sort of a cultural problem in the rating agencies," Kolschinsky said.
And now Newsweek suggests that maybe the agencies should go the way Arthur Andersen following the Enron debacle.
"Remember Arthur Andersen? The giant accounting firm ceased operation in 2002 after authorities learned that its auditors had shredded documents related to Enron's fraudulent schemes and were probably complicit in those practices. Even though the firm's felony conviction was later vacated by the Supreme Court, Arthur Andersen's name was so tarnished, and it faced so many outstanding lawsuits, that no one wanted to do business with it any longer. End of story. That's life in the capitalist system, folks.
"One of the most distressing things about the current financial scandal is that there has been no similar reckoning against the firms that were supposed to be watching the system for the investment public. Why haven't the rating agencies that were complicit in the subprime-mortgage securities scandal suffered the fate of Arthur Andersen? Despite some moves in Congress to change their behavior, U.S. authorities are still treating the agencies with extreme gentleness."
The fact that nobody has been charged yet with fraud suggests the stand off with agencies still has some way to go. Regulators have shown no sign of cracking down on them and bringing them to justice.
no comment untill now