You know a hearing is going bad when a congressman start reading instant messages between two of your employees that goes like this:

          Official 1: By the way, that deal is ridiculous
          Official 2: I know, right. The model definitely doesn't capture half the risk.
          Official 1: We should not be rating it
          Official 2: We rate every deal. It could be structured by cows and we would rate it
          Official 1: There is a lot of risk associated with it. I personally don't feel comfy signing off as a committee member.

A cow? Half the risk? One witness, prosecution friendly so to speak, told how he requested underlying loan data to rate a CDO. His boss at Standard & Poor's responded in an email that the request was "totally unreasonable." Obviously, S&P, Moody's and Fitch have some PR work to do.

 For more:
- here's a New York Times write up

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The future of CDOs?