This might come as a surprise to you, but Egan-Jones had about as much to do with "debt packages assembled from margarita ville securities were AAA+" as George Carlin did. E-J is being disciplined for compliance discrepancies. They claimed in 2008 that they had asset-backed rating experience, when in fact they had not. Further convinces me that Dodd-Frank is designed solely to snare any entity the SEC feels like, certainly hasn't and won't help anything.
Egan-Jones is also the only ratings shop (and E-J is puny, btw) that doesn't get paid by the issuers of the securities they rate, ie. "evil bankers".
But what the fuck difference should that make, right? No lenience for that evil scum!
So enjoy your pound of flesh, bro.
On July 16, 2011, Egan-Jones downgraded the U.S.’s sovereign debt by one notch, to double-A plus from triple-A due to “the relatively high level of debt and the difficulty in significantly cutting spending.”
Two days later, the SEC’s Office of Compliance Inspections and Examinations called Egan-Jones demanding information about its downgrade. That following month, S&P downgraded the U.S.’s sovereign debt, and also met with a government backlash.
That October, the SEC called Egan-Jones to inform the firm it was filing a Wells Notice, often meaning an SEC probe had been launched. Wells Notices are an indication SEC “staff is nearing a completion point of its investigation and is potentially going to recommend an enforcement action to the commission,” notes an SEC spokesman.
And what about the publicly traded Moodys/Standard & Poors, which are staffed with sterling professionals angling for investment banking and syndicate desk jobs at JP Morgan, Goldman, etc.?
Well, I'm sure they got the message. Finally, financial reform!!!
