Conflicts of interest.

This is just WRONG (full post here).

After I handed the book into the publisher (McGraw Hill), they let me know they had problems with my assessment of the Ratings Agencies. They were unhappy with my calling them “Pimps & Hos“, or describing their business model of rating junk bonds as AAA for big fees as “Payola.” (What else would you call it?)

Not coincidentally, McGraw Hill owns of the largest Rating Agencies, Standard & Poor’s.

My compromise was to change the tone — namely, to remove the reference to Pimps. However, in its place I was going to add publicly available data and congressional testimony, more detailed analysis, and quotations from experts. When it was finished, I found the revised section to be less vitriolic — but far more devastating to S&P. They (along with fellow rating agencies Moody’s and Fitch’s) were key enablers to the entire crisis. There were many other guilty parties, but I simply could not under-emphasize the ratings agencies.

When McGH rejected it again, I exercised my right to buy the manuscript back from them in January 2009 (I returned the advance). Numerous publishers were interested, but I went with Wiley — they have a great deal of experience publishing business/investing related books, and as a publisher, had no conflicts of interest that would interfere with telling the full story.

Aren’t there supposed to be firewalls or something to prevent this? After the Washington Post’s “error in judgment” last week, I guess we can’t be too confident that editorial firewalls are effective. The cynic in my always expected this from Rupert Murdoch’s publications, but Wapo and McGraw-Hill!! I am sooooo disappointed!!