Thursday, June 3, 2010

Blown Calls

Poor Jim Joyce.

His blown call cost Detroit Tigers pitcher Armando Galarraga a perfect game -- and has since made him the most infamous umpire in Major League Baseball.

And all because of one bad call. Imagine if Joyce had blown thousands of such calls. He wouldn't be an umpire for long, would he? But he could work for a credit rating agency, where bad calls seem to be the norm.

It turns out that just as the Tigers were getting ready to play, the head of one of the nation's largest credit rating agencies, Moody's, was also warming up for his testimony before the Financial Crisis Inquiry Commission.

The commission, as its name implies, is investigating the causes of the nation's latest round of financial shenanigans. And it is now zeroing in on the companies that rated all those lovely securities that quickly turned into compost.

Phil Angelides, the commission's chairman, wasted no time in putting a bulls eye squarely on the back of Moody's. In his opening statement he said that 89 percent of the securities given a top triple-A rating by Moody's were later downgraded. 89 percent!

"The miss was huge," said Angelides. "Ninety percent downgrade. Even the dumbest kid gets 10% on the exam."

Former employees of Moody's attributed this appalling record to the culture in place at Moody's. "Cooperative analysts got good reviews, promotions, higher pay, bigger bonuses, better grants of stock options and restricted stock," said one former employee.

Uncooperative analysts, on the other hand, were often fired.

At least Joyce had the courage to admit that he made a mistake and to apologize to his victim.

This quality seems in short supply on Wall Street.

Labels: , ,


Post a Comment

Subscribe to Post Comments [Atom]

<< Home