Magaziner said in an email to me: “I believe that one of the biggest disappointments with the Dodd-Frank Financial reform was its failure to adequately deal with the ratings agencies, which absolutely shared a great deal of responsibility for the 2008 financial crisis. It is ludicrous that bond issuances are rated by for-profit companies which are paid by the issuers. The conflicts of interest are mind-boggling.”
He continued, “38 Studios was a terrible deal for taxpayers. I believe we should explore any legal avenue that might limit the cost to taxpayers, including the role played by the ratings agencies. As Treasurer I will also work to bring all parties to the 38 Studios deal to the negotiating table, to see if we can reach a settlement that will minimize cost to taxpayers while avoiding the potentially severe consequences of an outright default.”
Magaziner has criticized Frank Caprio’s initial support of the 38 Studios deal, but as I pointed out in a previous post, Caprio did eventually come out strong against the deal and did his best to prevent it from happening.
Despite his criticism of Caprio, the two candidates seem to agree more than they disagree. But it seems that Magaziner’s approach is too muted. I’d like to see him be more vocal about standing up to Wall Street and fighting for the people of Rhode Island.
]]>An appeals court just rejected the ratings agencies claims that the opinions they expressed in a case involving the CA pension system were protected by free speech.
Kudos to Frank Caprio, who said that he asked the ratings agencies not to rate the 38 Studios bonds in order to stop the deal in 2010, for being vocal on this issue.
The question still remains – when will Rhode Island stand up to the ratings agencies? When will AG Kilmartin join the federal government and other states in suing the ratings agencies?
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