— In March 2007, one analyst wrote an ode to the subprime mortgage meltdown, emailing colleagues with a takeoff on the song "Burning Down the House" by The Talking Heads.
"Watch out/Housing market went softer/Cooling down/Strong market is now much weaker/Subprime is boi-ling o-ver/Bringing down the house," he wrote.
A few days later, the analyst sent a video of himself singing and dancing that verse in S&P offices, with colleagues laughing.
— In April 2007, two S&P analysts spoke via instant message about how they didn't think S&P's ratings model for some investments accurately estimated the risks.
Analyst 1: btw that deal is ridiculous
Analyst 2: I know right ... model def does not capture half of the ... risk
Analyst 1: We should not be rating it
Analyst 2: we rate every deal .... it could be structured by cows and we would rate it
Analyst 1: but there's a lot of risk associated with it - I personally don't feel comfy signing off as a committee member
The S&P says this analyst had her concerns addressed with the issuer before S&P issued any rating.
—In July 2007, an S&P analyst and an investment banker discussed the payment structure for ratings agencies like S&P, which are paid by the same banks whose investments they're rating.
S&P analyst: "The fact is, there was a lot of internal pressure in S&P to downgrade lots of deals earlier on before this thing started blowing up. But the leadership was concerned of p(asterisk)ssing off too many clients and jumping the gun ahead of Fitch and Moody's."
Investment banker: "This might shake out a completely different way of doing biz in the industry. I mean come on, we pay you to rate our deals, and the better the rating the more money we make?!?! Whats up with that? How are you possibly supposed to be impartial????"