The Homa Files

Excerpted from Portfolio.com, “The End of Wall Street”, Lewis, Nov. 14, 2008

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“As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s . The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating [of sub-prome mortgage backed securities] will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

“With all due respect, sir,” Daniel told the C.E.O. deferentially as they left the meeting, “you’re delusional.”
This wasn’t Fitch or even S&P.

This was Moody’s, the aristocrats of the rating business, 20 percent owned by Warren Buffett.”

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Ken’s Take: How come Mr. Buffett gets a pass on this mortgage mess?  Until this article, I hadn’t seen his ownership stake in Moody’s — which rated the toxic assets AAA — mentioned anywhere.

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For an “inside baseball” narrative of the sub-prime mortgage backed security mess — the best I’ve seen —
read the full article :
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom

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This entry was posted on November 18, 2008 at 7:59 am and is filed under Financial Crisis, Mortgage Crisis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.