From the Wall Street Journal:
.... for those closely following the role of the credit raters in the financial crisis, the more-interesting testimony may come from a little-known former Moody’s executive named Gary Witt.
In Witt’s written testimony submitted to the commission, Witt says: “concerns that rating analysts and investment banking analysts worked too closely together prior to the issuance of securitized debt is a legitimate concern.” In particular, he describes a situation involving one of his staffers, a lawyer named Rick Michalek, who was removed from rating Goldman Sachs Group CDOs because the investment bank requested that he be taken off their deals.
“In my opinion, Rick Michalek was an exceptionally thorough legal analyst. His zealous document reviews were an added expense for investment banks who hired top law firms as transaction counsel with high hourly fees. It was my understanding that this behavior (exceptionally thorough document reviews that resulted in high legal fees being charged to investment banks) had led to a personal reprimand from Brian Clarkson, then head of structured finance.”
“To the best of my recollection, in late 2004 or early 2005, I received a request from a CDO structurer at Goldman Sachs that Rick not be assigned to further Goldman Sachs CDOs for the next year. I was told that failure to comply with their request would result in a phone call to one of my superiors. I was concerned that this could possibly result in Rick’s dismissal.”
Read the rest here
Something totally different but just as important: Proper booming for oil spills