The IMF is sitting on one of the best global models of the world, and still cannot come up with anything better than a wild stab into the dark (the analysis, if you are interested, is here: http://globalstructures.blogspot.com/2009/04/imf-in-dark.html). The rating agencies cannot do else than take these meaningless forecasts. The distortions originating from their business models are almost secondary to that…

see: NRSRO, these rating agencies are still, gov’t enforced/approved, “Coin of the Realm”..

Transor,

this: “Bear in mind that professional malpractice is nothing more than ordinary negligence as it applies to performing the tasks of certain professions.”, and the rest of your explaination, was Spot-on.

Thank you for expounding.
~~~
as an aside, these cats: http://www.egan-jones.com/ in the NRSRO-sphere, seem to be the best of an, otherwise, horrid bunch.

and, if we were in any semblance of a Free Market, these peep: http://daily.gimmecredit.com/gcdaily/request would be as well known as S&P, aka “the Standard is to make you stupid & Poor”

“Mr. Barofsky reports that his office “has been informed by the Federal Reserve that it is considering, but has not yet adopted” a plan to replace credit ratings with actual examinations of the underlying loan portfolios. He further reports that Treasury says that “conducting due diligence with respect to the underlying collateral” will be part of its plan for investing in mortgage-backed securities. Imagine that: Trying to find out what they are buying before committing your money.”

http://online.wsj.com/article/SB124087462292661301.html

What kind of working environment or mechanism(s) would the rating agencies require to accomplish what the regulators (including the SEC) and most investors (including many management firms) apparently could or would not: The detection of a risky credit produced by a firm either willing to lie about (e.g., Enron) or gloss (most CDS and SIV products) its parameters?

Just one question: are people ever going to learn to see the context in which statements occur? Or will they persist indefinitely in getting all gaga whenever *anyone* says something that validates their preconcieved conclusions?

The general rule in torts is that after-the-fact remedial measures are not admissible to prove liability and also don’t work to relieve you of liability for the earlier conduct.

“Gross” is just a variant of the regular old negligence tort that incorporates a higher degree of “wrongful” conduct. So it’s harder to prove. Often you’ll see “gross negligence” in contract liability provisions to limit one party’s liability to only the worst kinds of negligent conduct. In many cases “gross negligence” by one party will trigger a requirement to indemnify the other party.

Bear in mind that professional malpractice is nothing more than ordinary negligence as it applies to performing the tasks of certain professions.

@snapshot: Orange County sued McGraw-Hill under a theory of negligence and breach of contract. Ten years after the California decision, there may be a lot more ammo to support claims that ratings agencies acted with reckless disregard for the truth. Bear in mind that Orange County was suing S&P for being merely incompetent. We have the “structured by cows” in-house email and others, plus whistleblower testimony. There may be enough to get the case to trial — and as Grassi says, they sure as hell don’t want a jury to get these cases. Also, the California district court opinion is not binding on SDNY federal courts, so who knows how things will turn out…