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ECONOMICS – FINANCE – WORLD NEWS – GREEK DEBT

Sue the banks (check), sue the auditors (check), sue the rating agencies (pending)

We’ve done the banks and the auditors, now it’s time to turn to other services providers in the sector: the rating agencies. The US Department of Justice is suing Standard&Poor’s (McGraw-Hill) over mortgage-bond ratings between September 2004 and October 2007. According to the filings, the ratings agency understated the riskiness of the assets sold. According to Bloomberg:

The company bent rating models to suit its business needs to the extent that one CDO analyst commented that loosening the measure of default risk for a certain security in 2006 “resulted in a loophole in S&P’s rating model big enough to drive a Mack truck through,” the U.S. said.

Shares in the publishing company fell the most since 1987 in response to the lawsuit. In November 2012, S&P was found guilty for misrating CPDOs (constant proportion debt obligations). The other big rating agencies, Moody’s and Fitch, which presumably did the exact same thing at the exact same time, have been left alone so farread article

Across the pond, Barclays bill for mis-selling products has increased to more than £3.4bn. Today, the bank announced to add £425m to the pool used for redress on mis-sold interest rate hedges, as well as adding another £600m to the indemnities pool for mis-sold payment protection insurance. read article

From ZeroHegde:

In the meantime, the political scandal scene in both Italy and Spain is unchanged, and getting worse, especially with Rajoy summarizing it all with this absolute pearl according to El Pais: Rajoy Says “It’s All Untrue, Except Some of It. No seriously, he said that.

In other news, the banking union turns out to be job creation machine: The ECB, which is meeting on Thursday, will have to hire up to 2,000 people to fully exercise its responsibilities as the watchdog of the banking union. Over in China, the People’s Bank of China injected RMB450bn ($72bn) into the country’s money markets as part of a short-term liquidity fix before the Chinese New Year holiday. 

So long.

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