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Letters: What S&P knew, and what it did

February 08, 2013

Re "Is S&P to blame?," Editorial, Feb. 6

Wall Street knew before the financial crisis that highly rated mortgage-backed securities were problematic. According to Michael Lewis' book "The Big Short," everyone close to the situation — including the rating agencies — knew that the mortgages that were bundled into those horrible securities were not just "flawed," they were garbage. Time cannot reduce the smell.

And what's this about Standard & Poor's having the freedom to express its opinion? Should PricewaterhouseCoopers not be held responsible for a bungled audit in which it renders a reckless opinion on the financial statements of a company?

Yes, S&P is responsible and should be liable.

Gary M. Barnbaum

Woodland Hills

It is doubtful that the credit rating agencies would disappear altogether, no matter the outcome of the lawsuits against them. I would hope that one result of litigation would be to bar these agencies from being paid by the entities they rate, which could easily create a conflict of interest.

Still, how much worse of an economic disaster would their demise be, considering the disaster they have already perpetrated with their questionable opinions?

Mary Lucero

West Hills

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