It sure looks like payback for S&P’s downgrade rating on U.S. debt.
Justice is looking at S&P’s ratings from 2006 and 2007 on various mortgage securities. Did S&P expect to make more money by giving positive ratings on these securities, more positive than analysts believed?
The rating agencies were just guessing as they tried to assess subprime mortgages and how much they were worth. There’s no history to subprime mortgages. Prime mortgages have a history.
Bloomberg says: The U.S. Justice Department is probing Moody’s Investors Service and Standard & Poor’s over ratings of mortgage-backed securities, according to three former employees who said they were interviewed by investigators.
Washington-based lawyers from the Justice Department spoke to former employees as recently as last month about whether the companies raised their grades for the complex investments in order to win business, said the former employees, who asked for anonymity because the investigation is ongoing. The inquiry is a civil matter, two of the former employees said.