Justice Dept. Investigating S&P Ratings of Mortgages
August 18, 2011
The New York Times is reporting that the Justice Department is investigating the the nation’s largest credit ratings agency, Standard & Poor’s for improperly rating dozens of mortgage securities in the years leading up to the financial crisis. Sources telling the Times that the Securities and Exchange Commission is investigating S&P for possible misconduct based on reports of incidents where the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers. The investigation may be perceived as payback, but it reportedly began before S&P’s high-profile downgrade of the U.S.’s AAA credit rating. It is not immediately clear if the Justice Department investigation includes the other two rating agencies, Moody’s and Fitch.