In what shouldn’t come as news, but is just as telling nonetheless, analysts at Standard & Poor’s Ratings Services were apparently the most vocal of three major credit rating agencies in questioning their own RMBS ratings process, according to a story published by the Wall Street Journal this weekend. More than a few industry experts that HW has spoken with have pointed directly to the rating agencies as the catalyst for an industry that spun out of control. The Journal story excerpts from a draft version of a Securities and Exchange Commission report that was released last month — the final version removed any references to specific firms. The draft version maintained references to specific firms, according to the Journal’s report. In one email, an S&P staffer emailed another that an RMBS deal being rated was “ridiculous” and that “we should not be rating it,” according to the report. They reply came back saying that “we rate every deal,” and that “it could be structured by cows and we would rate it.” The story cites another manager in the company’s CDO ratings group, who wrote that the agencies were creating an “even bigger monster — the CDO market. Let’s hope we are all wealthy and retired by the time this house of cards falters.” The email ended with an emoticon “;O),” relevant because it shows that if any concern was known among S&P’s ratings team at the time, it wasn’t one that was taken seriously. Of course, both CDO and RMBS deals, as well as a host of other structured securities, have littered a capital market that has been knocked sideways since the credit crisis began in earnest one year ago; experts have suggested in recent weeks that losses from the crisis will likely top over $1 trilion. Part of the problem — and one that HW has heard about extensively from staffers still at various rating agencies, as well as a few analysts that have since left both S&P and Moody’s in particular — is that analysts were worked “like a mill,” said one former analyst that spoke with HW over the weekend. “You’ve got to understand that every firm here was throwing people at the ratings process, given the money involved, but nobody could really ever keep up,” said the source, who worked rating CDO deals and commented under condition of anonymity. “The learning curve is steep, and the process complex. It’s not something that just anyone could do, but astronomical growth far outpaced [any firms’ ability] to stay ahead of the business from a staffing perspective.” That source said the result was that most firms were often short-handed, turnover was high, and deals were rated often “to get them out of the door.” “The idea that the agencies actively colluded with issuers misses the point, in my opinion,” said the source. “That would assume that we had the time and ability to do so, neither of which was often the case. We really were turned into order takers, and our main concern was to keep deals.” It’s worth noting that Fitch Ratings — one of the three major credit rating agencies and often third-fiddle to both S&P and Moody’s Investors Service — was rarely mentioned in the SEC report, according to the Journal. A representative for Fitch Ratings told the paper, “Certain of the examples in the SEC’s report do pertain to Fitch but a large number do not.”