Financial Misrepresentation Quotes
Moody’s and Standard & Poors, the 2 largest credit rating agencies, gave A ratings to securities that had packaged terrible F-rated, toxic, subprime mortgages, and gotten the credit ratings agencies to rate them as A on the theory that the risk was diversified. Each new security like this that a bank put out was submitted informally to one of the credit rating agencies to “discuss”. If the agency “concluded” that they could give it an A rating, they received a very large fee. If not, the bank would not officially submit the security and not pay anything. That almost never happened with these packages of subprime mortgages.
In "Dynamic Scoring" the assumption made in doing the national budget projection is that the projected national growth rate should be much higher than it is currently or has been in recent years. This assumtption implies that government tax revenues will be much greater which means they can spend money on ther favorite programs and still have a balanced budget. Typical justification of the increased growth rate is that they will lower the tax rate. In the Regan and George W. Bush administrations where Dynamic Scoring was used, there was a cut in taxes, but it never produced the higher government revenues that were promised. Sam Brownback, an idologically conservative Governor of Kansas had used Dynamic Scoring and tax decreases to create the state budget a few years before and almost banrupted the state which hardly grew at all while the rest of the country grew reasonable. Actually, in the Clinton administation, taxes rates were raised, and growth and government revenue both incrased marketly. The Congressional Bedget Office, the agency resonsible for the scoring (projecting the effect) of proposals for the budget and laws that would effect the budget, has refused to use Dynamic Scoring, much to the distress of the indeological conservatives.
