Did McGraw Hill pull out of a book deal with a top financial blogger because it looked like the book would be critical of Standard & Poor’s, the credit ratings agency owned by McGraw?
Portfolio reports that the publisher has dropped Barry Ritholtz’s Bailout Nation. And Ritholtz — a TPM friend and investment expert who runs an institutional research firm — claims it’s because he ripped S&P.
The major credit ratings agencies, S&P perhaps foremost among them, have been widely criticized (by TPMmuckraker, no less) for helping to enable the financial crisis, by sticking grade A ratings on toxic mortgage assets — a move which pleased the investment banks, who are the ratings agencies’ customers.
Ritholtz wrote in his original manuscript that the ratings agencies “conducted a form of ‘payola.’ “
These three rating agencies were the key enablers in the housing crisis and the subprime debacle. They were the pimps to the fixed-income fund managers’ johns. The investment banks whored out junk paper, and the ratings agencies were extremely well compensated for their role in helping to create the entire subprime fiasco. But for their imprimatur of triple-A respectability on garbage paper, it could not have danced its way onto the laps of so many drooling buyers.
When McGraw Hill complained, the writer agreed to take out that passage. But, according to Ritholtz, the publisher still wasn’t happy, saying it couldn’t verify his assertions — a rationale Ritholtz, speaking to Portfolio, rejects as a manufactured excuse. The book’s general take remained critical of the ratings agencies.
In a post on the blog The Big Picture, Ritholtz offers more details about the sequence of events, and claims that the contract he signed with McGraw gave him final edit rights.
He also adds that over the summer, a McGraw Hill publisher told him that the section on the ratings agencies would have to be handled “delicately and diplomatically.”
In any case, the deal ultimately fell apart — and the notion that it was because McGraw Hill couldn’t stomach Ritholtz’s frank criticism of S&P is tough to shake.
Portfolio adds the publisher’s side:
McGraw Hill spokesman Steven Weiss this afternoon said the publisher dropped the book because of a conflict with Ritholtz over editing, not because of his criticism of S&P. “The material needed extensive corroboration across a range of topics. We could not agree on unified approach with the author for resolving the issues,” Weiss said. He denied that the publisher dropped the book because of what Ritholtz had written about S&P. “It is simply not true,” Weiss said. “We have a range of editorial entities that often report critically about the company and we support and encourage their independent voices.”
Ritholtz told Portfolio that other publishers are interested in Bailout Nation. So we may even get to see the full unedited version of the book.