Even though he was the largest shareholder in Moody’s, Warren Buffett was shocked, just shocked, that they were giving high ratings to garbage debt and anguished before a Senate hearing, who could have known that the ratings were spurious.
Well, actually, the answer to that is – quite a few financial blogs, like Calculated Risk, knew and were blogging about it for months, if not years. Also, Buffett is known for doing intensive research into a company before buying a stake in it.
When the smoke finally clears over the massive greedfest fueled by garbage ratings from companies like Moody’s, Buffett’s reputation may be like what Alan Greenspan’s is now – destroyed. And for good reason.
Here’s how the scam worked. Banksters would package up low-rated toxic glop, take it to Moodys, and if they ok’ed it, the glop then magically took on Moodys triple-A rating. Smoke and mirrors, as performed by snakes.