Great, boys, thanks for showing up. McGraw-Hill, parent to Standard & Poor’s, announced on Monday that it received a Wells notice from the SEC related to S&P’s rating of a collateralized debt obligation from 2007 (yes, 2007).
In 2009, about a year after home values, 401(k) balances and best-laid retirement plans completely cratered, Standard & Poor’s Ratings Service announced it was reviewing how it assigned ratings to collateralized debt obligations because of “changing market conditions amid the deepening recessions in the U.S. and Europe.”
As we said then, good to know, but why it took them a year is anyone’s guess. It was, and is, instructive of regulation’s role in actually regulating markets (or not). The SEC was the enforcer; S&P was one of three rating agencies that enjoyed the fruits of government sanctioned (scratch, required) collusion in the blessings it bestowed. Both failed, miserably.