"SEC Pursues Egan Jones; Moody’s, S&P Remain At Large"

If anybody needed any more proof of the complete and utter incompetence of the SEC and its inaction regarding the misconduct of the ratings agencies Standard & Poor's [S&P] and Moody's, just read this entry on Barry Ritholtz's blog, The Big Picture, entitled "SEC Pursues Egan Jones; Moody’s, S&P Remain At Large."

Excerpts:

“The Securities and Exchange Commission voted Thursday in favor of bringing an administrative action against Egan-Jones...In what would be an unprecedented move, the SEC could seek to punish the firm by stripping it of its ability to issue officially recognized ratings on securities tied to government debt and asset-backed deals. An SEC spokesman declined to comment.

"At the same time, we have a broad set of systemic errors made by the two much larger competitors, Moody's and Standard & Poor's. These two firms, by design, gave triple AAA ratings to piles of junk paper. They did so because that was what they were paid to do by the underwriters.

"These were not good faith errors. They were instead a reflection of a wholly corrupted industry, designed to mislead investors and legitimize junk paper."

Then Ritholtz quotes Nobel-Prize winning economist Jospeh Stiglitz, "[The ratings agencies] were the party that performed that alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the ratings agencies.”  Source.

My comment:

Egan-Jones proudly declares on its home page Mission Statement that it is: "an independent NRSRO* and not paid by corporations issuing bonds."

So here's pint-sized and thorougly honest and impartial Egan-Jones, which--unlike the goliaths S & P and Moody's, who were paid millions by the banksters to rate worthless, toxic instruments as AAA--gets whacked by the thugs at the SEC, while S&P and Moody's, whose criminal conduct is known by one and all, "remain at large."

And S & P and Moody's overtly criminal conduct directly caused the loss of billions of dollars by pension funds, insurance companies, municipalities and other entities not only in America but around the world--and yet nobody has gone after them. 

What is the SEC waiting on, anyway?  After all, the SEC which is mandated by law to protect investors, not to protect the crooks and criminals.  The first sentence of the SEC Mission Statement reads:

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. 

The SEC's action--punishing the honest agency Egan-Jones while blindly ignoring the intentional criminal conduct of S&P and Moody's--is just more proof of its incompence and its failure to implement the duties and responsibilities required by its own mission statement.

What is needed is to bring S&P and Moody's to justice.  The SEC needs to act now!

*  Nationally Recognized Statistical Rating Organization