Did Ratings Agencies Commit Fraud On Mortgage-Backed Securities?

Did the three ratings agencies do adequate homework before they bestowed ratings on mortgage-backed securities?

The rating agencies obviously got it badly wrong and they’ve received much of the blame for the housing crash.

Bloomberg first reported on S&P in this regard three years ago.

So now Justice is making noises about going after S&P?

The timing is suspicious.

The WSJ reports:

Justice Department investigators also wanted to learn whether managers had encouraged analysts of mortgage-backed securities to cater to bankers, prioritizing profits over the quality of ratings, the former Moody’s employee said. The person added that Justice Department investigators also had contacted a former S&P employee.

Civil investigations by the Justice Department can result in the agency seeking to recover federal funds lost through fraud or other violations of law. In contrast, criminal probes can lead to charges against individuals for violations of federal criminal statutes.

S&P, a unit of McGraw-Hill Cos., cut its rating on the U.S. to double-A-plus from triple-A earlier this month. Since then, Moody’s and Fimalac SA’s Fitch Ratings have affirmed their triple-A ratings.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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