U.S. Inquiry Eyes S.&P. Ratings Of Mortgages

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The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.

The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it is likely to add fuel to the political firestorm that has surrounded that action. Lawmakers and some administration officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.

In the mortgage inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers, according to the people with knowledge of the interviews. If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns.

It is unclear if the Justice Department investigation involves the other two ratings agencies, Moody’s and Fitch, or only S.& P.

READ MORE: NY TIMES

3 COMMENTS

  1. The issue already has been litigatged, and it was settled that a rating of a security if covered by Freedom of the Press. This sounds like political retribution to S&P for criticizing the American government in general, and the Obama administration in particular

    P.S. The issue if free press. The fact that their ratings are a joke is irrelvant.

  2. Standard & Poor’s is part of McGraw-Hill, which has been doing business — with courtesy, generosity, and respect — with Jews and Jewish businesses in the U.S. and Israel for many years. (I consider the McGraw-Hill people with whom I have dealt to be Chassidei Umos HaOlam [righteous Gentiles].)

    The same cannot be said regarding President Obama and his administration.

  3. I agree with #1 (just turn your if’s into is!). It really seems like good timing by obama administration to buckle down on the S&P while ignoring fitch and moody’s all of who said the same exact thing.