Guan Jianzhong, chairman of Dagong Global Credit Rating to Financial Times
“The western rating agencies are politicised and highly ideological and they do not adhere to objective standards.”
“The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests.”
FT adds
In the aftermath of the financial crisis “rating shopping” has been one of the key complaints from western regulators , who have heavily criticised the big three agencies for handing top ratings to mortgage-linked securities that turned toxic when the US housing market collapsed in 2007
China may be talking their book here and of course has their own interests. However, what they are saying about our corrupt rating agencies is demonstrably true. The rating agencies time and time again rated toxic slop as triple-A as they made huge profits.
Here’s how the fraud worked. Under our compromised regulations and laws, any garbage they rated instantly assumed the triple-A rating of the rating agency. By any objective standard, this is a compromised, ethically challenged, and inevitably corrupt way of doing business.
This is known as control fraud, getting the rules changed so the players can make huge sums. William Black, an expert in the field says, the failure of the institution is not the failure of the control fraud. The players don’t care if they destroy companies, economies, or institutions, not if they’ve personally made millions (or billions.) Emphasis added.
Black asserted that the banking crisis in the United States that started in late 2008 is essentially a big Ponzi scheme; that the “liar loans” and other financial tricks were essentially illegal frauds; and that the triple-A ratings given to these loans was part of a criminal cover-up. He said that the “Prompt Corrective Action Law” passed after the Savings and Loan crisis mandated that ailing banks should be put into receivership. Black also stated that trying to hide how bad the situation is will simply prolong the problem, as happened in Japan’s lost decade. Black stated that Timothy Geithner is engaged in a cover-up, and that the administration does not want people to understand what went wrong or how bad the banking situation is today.
We have an extensive archive here on control fraud, including several videos interviewing Black.