NEW YORK (The Street) - The batch of F-rated securities "could have been structured by cows," one handler wrote.
Another admitted, "We sold our soul to the devil."
The job was a total "scam," a third wrote.
These emails did not come from artists pushing pump and dump penny stocks, but respected analysts at the Big Three ratings houses -- Moody's (MCO), Fitch (a unit of Fimalac, FIM: EM Paris) and Standard & Poor's (a unit of McGraw-Hill, (MHFI). The communications, part of a trove of emails, were entered in a 141-page complaint filed Monday by liquidators of two Bear Stearns hedge funds, the collapse of which resulted in investor losses of more than a billion dollars.
"It is time," said James McCarroll, a lawyer representing the liquidators," for these organizations to be accountable for their misdeeds."
Not that the ratings houses hadn't been tagged before by prosecutors. Last year the Justice Department filed a fraud action against S&P, the first time a ratings agency had been targeted by the feds. After which a welter of states in which employee pension funds suffered by inflated ratings filed against S&P.
To be sure, managers of the Bear Stearns funds misrepresented the quality of the bonds they sold. But the high ratings of the junk, some labeled as triple-A, allowed the managers to perpetrate a massive fraud, one that became emblematic of deep economic crisis of 2008-2009.
"The three credit rating agencies were key enablers of the financial meltdown," wrote congressional investigators. "The mortgage-related securities at the heart of crisis could not have been market3e and sold without their seal of approval. Investor relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened without the ratings agencies."