PBS NIGHTLY NEWS TRANSCIPT:
PAUL SOLMAN: At the Museum of American Finance on Wall Street: the co-authors of “All the Devils Are Here: The Hidden History of the Financial Crisis.”
Bethany McLean, famous for breaking the Enron story, is a contributing editor at “Vanity Fair” magazine, Joe Nocera, a columnist for The New York Times…
You frame this book as a look back at the whole financial crisis, so I thought I would frame this interview as a: Who is the biggest culprit?
JOE NOCERA: I certainly would put the rating agencies right at the top of my list of bad guys, or my list of devils.
A place like Moody’s took a culture that had a reputation for some integrity, and completely corrupted it in a drive for market share and profits.
PAUL SOLMAN: So, biggest culprit, ratings agencies; you agree?
BETHANY MCLEAN: I do agree. If they hadn’t taken subprime mortgages and rated enormous quantities of them AAA, meaning they gave those bonds the same credit rating as the U.S. government debt has, this — this whole thing couldn’t have happened, because debt that is rated AAA is precisely the debt that is snapped up by the largest quantity of buyers all around the world, buyers who are not capable of doing the detailed work to analyze these bonds by themselves.
And yet there is still this myth that these buyers are supposed to be sophisticated buyers, and they’re supposed to understand what they’re getting into. And the cornerstone of this myth, the thing that makes it all work, is the rating agencies, because the investment banks say, well, we sold AAA securities. .. (more)
The question of “who is to guard the guardians” is as old as Socrates.
Clearly, our “self-regulating” capitalistic system no longer works the way it should or was intended to.