From a February 4 complaint by the U.S. Department of Justice against the credit-rating agency Standard & Poor’s, charging that S&P fraudulently inflated ratings on residential-mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs). The Justice Department is seeking $5 billion in penalties.

On or about March 19, 2007, Analyst D, who had conducted a “risk ranking” analysis of 2006-vintage RMBS, sent an email to several analysts with the subject line: “Burning Down the House — Talking Heads.” The email stated:

With apologies to David Byrne, here’s my version of “Burning Down the House.”

Watch out
Housing market went…