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.
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.