It is a fairly common dodge for corporate con artists: whatever they are doing to garner huge sums of money is actually in the larger public interest. That’s why, for instance, it’s important that hedge fund managers pay lower tax rates than those of us who get to live with the results of their malfeasance.
But I think this one wins the chutzpah award in this category, and that’s saying something. Here’s Moody’s Chief Executive Raymond McDaniel explaining why the present conflict of interest riddled security rating system is good for you and me. He was testifying before the sham Financial Crisis Inquiry Commission, about the abysmally poor record of the rating agencies and the fact that they are paid to rate securities by the very entities that issue the securities-hardly an incentive for objective reporting.
“We believed that ratings were our best opinion at the time that we assigned them,” McDaniel testified. “The regret is genuine and deep.”
He also said there is an “important public good” served by the current issuer-pays model, saying that ratings are later released publicly for free. McDaniel blamed the financial crisis mainly on weakened housing and tightened credit.
Well, that changes everything. It’s so nice to know that I don’t have to pay for the privilege of being bilked. Maybe BP should try a similar argument and point out that all those Florida coastline communities are getting all the oil they want for absolutely nothing.
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