Skip to content
Subscriber Only

S&P Credibility Seen Eroded by Complicity in Soured Deals

The mortgage-bond market that David Tesher had described as “a wildly spinning top” was about to tumble when he convened a meeting at Standard & Poor’s Water Street headquarters in New York in March 2007.

Tesher, a managing director, told ratings analysts packed into a windowless 41st-floor conference room that Wall Street clients were under pressure to move souring mortgages into new securities called CDOs before the market crashed. Issuers needed the highest grades on the repackaged bonds to sell them to pension funds, banks and other investors. Tesher’s message, according to a government lawsuit: “Try to be cooperative.”