Rating agencies on the griddle…

Despite the blustery weather in New York today, I’m guessing there’s a few New Yorkers who wish they were ensconced on the quiet car of the Acela instead of being chewed out by a parade of Congressmen (and women) for their role in the credit crisis. For the past four hours, I’ve had the Committee on Oversight and Government Reform on in the background as it has poked and prodded a number of different witnesses, including the CEOs of Moody’s (MCO), Standard & Poor’s (a unit of MHP) and Fitch
on the role that the different agencies played leading up to the current mess we’ve found ourselves in.

I’ve heard a lot of talk about cows, in part due to an instant message between two S&P employees — Shannon Mooney and Ralul Dilip Shah that Rep. John Yarmuth read during the hearing and which is posted on committee’s site (along with lots of other goodies) and is also available here.

Shah: We should not be rating it

Mooney: We rate every deal. It could be structured by cows and we would rate it.

A short time ago, Rep. Yarmuth asked the three executives another question about whether they knew about their respective firms knowingly awarding a rating that wasn’t deserved. While all three said no — kind of the same way that tobacco industry executives once told Congress that cigarettes don’t cause cancer — Yarmuth wasn’t buying it. Democrats weren’t the only ones who were critical. Rep. Chris Shays (R-CT) asked a short time ago whether the company’s respective brands had been damaged. All three executives said yes — sort of.

It’s now 3 pm and the hearing just ended. Five hours! My bet is that Mssrs. Sharma, McDonald, and Joynt are going to enjoy that quiet car back to New York.