Home >> News >> Government >> NYT: Feds Investigating S&P Over MBS Ratings
Print This Post Print This Post

NYT: Feds Investigating S&P Over MBS Ratings

""Standard & Poor's"":http://www.standardandpoors.com/ debt downgrades rubbed salt in U.S. wounds over a dysfunctional political system, but now it may be the ratings agency's turn to blink in the negative spotlight. A ""_New York Times_"":http://www.nytimes.com/2011/08/18/business/us-inquiry-said-to-focus-on-s-p-ratings.html?_r=1&hp story alleges that the federal government plans to investigate whether S&P played fast and loose with ratings for mortgage-backed securities before the Great Recession.

[IMAGE]

According to the _Times_, the ""Justice Department"":http://www.justice.gov/ has undertaken an investigation to determine whether S&P gave insufficient attention to the now infamous financial products.

[COLUMN_BREAK]

The newspaper said that the investigation started well before the ratings agency slashed the U.S. AAA rating, with members of Congress and even policymakers from the administration questioning the agency's decision-making process and debt methodologies.

If Justice Department officials unravel enough information to call S&P's practices into question, the _Times_ reports, the government could build a civil case that tarnishes the agency's standing and independence.

S&P spokesperson Ed Sweeney informed the newspaper that his agency had been approached by various federal agencies over the past several years and that it planned to meet any requests in good faith.

Speaking to _MReport_ Wednesday, S&P spokespeople and representatives gave no indication that the government had launched an investigation into its ratings practices with mortgage-backed securities.

""_Reuters_"":http://www.reuters.com/article/2011/08/18/mortgage-probe-sp-idUSN1E77G23A20110818 reported that the ratings agency had fallen under fire from members of Congress, market watchers, and the ""Treasury Department"":http://www.treasury.gov/Pages/default.aspx since its decision to draw down the U.S. credit rating, a decision that roiled the stock markets and raised questions about the sustainability of the nation's polarized political system.

According to the _Times_, the ""Securities and Exchange Commission"":http://www.sec.gov/ has similarly started investigating S&P as well as fellow ratings agencies ""Moody's"":http://www.moodys.com/ and ""Fitch"":http://www.fitchratings.com/index_fitchratings.cfm.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
x

Check Also

Single-Family Zoning in California Slowly Fading

California’s governor recently passed new laws allowing for as many as three homes on land previously zoned single family. Find out more on the legislation.

GET THE NEWS YOU NEED, WHEN YOU NEED IT.

With daily content from MReport, you’ll never miss another important headline in originations, lending, or servicing. Subscribe to MDaily to begin receiving a complimentary daily email containing the top mortgage news and market information.