Just Like Wrestling

It looks legit, but scratch beneath the surface, and the game's as rigged as ever:

One of the CDOs was a $502 million deal called Plettenberg Bay. The government’s suit said S&P rated $436 million of the debt AAA, its highest mark, and that “Citibank suffered an almost total loss of its investment” after buying $8 million of the CDO’s lower-rated tranches. The suit didn’t mention that Citigroup was the CDO’s underwriter, or that other Plettenberg Bay investors are suing the bank over their losses.

Under the government’s version of the facts, S&P’s fraud caused the banks’ losses, and Citigroup and Bank of America were victims. I would hate to be a government attorney who has to stand in front of a jury and try to make that argument [...]

In real life, it probably will be hard to convince anyone that S&P deceived Citigroup or Bank of America about the safety of their own monstrous creations. S&P’s ratings duped lots of investors, for sure---but these investors? Come on. It’s almost like the feds are suing on the banks’ behalf.

---Baron V