Credit Rating Agencies Topic Archive

Yielding to Wall Street, Raters 'Drink the Kool-Aid'

In the lead up to the financial meltdown, Wall Street firms routinely exerted influence on the nation’s largest credit rating companies— which judge the quality and safety of bonds—and the companies often surrendered to the pressure, a Senate panel has found.

The rating companies, Standard & Poor’s and Moody’s, regularly awarded generous grades to thousands of mortgage-related investments that later collapsed and precipitated the financial crisis. Investors rely on the raters’ assessments in deciding what to buy and sell.

By Ben Protess22 April 2010

Facing Crackdown, Credit Raters Bring on Heavy Hitters

They're like the New York Yankees - controversial but unbeatable. Now these contributors to the financial crisis are spending record millions to hire some of the lobbying world's heaviest hitters. Their aim: Keeping disgruntled investors at bay.

 

By Ben Protess8 April 2010

In Details of Dodd Bill, Some Loopholes and Unanswered Questions

The fine print in the sweeping overhaul of the U.S. financial system proposed by Sen. Christopher Dodd reveals loopholes, ambiguities and unanswered questions about some key players – among them a new consumer protection bureau, credit-rating companies and payday lenders.

By Keith Epstein, Ben Protess and David Heath
16 March 2010

VIDEO: Barney Frank: Why Credit Raters 'Don't Like' My Bill

After nearly a year of debate, the U.S. House passed an historic overhaul of the nation's financial system last week. Financial Services Chairman Barney Frank (D-Mass.) cracked down on the credit rating industry, which gave top grades to toxic investments at the core of the financial crisis. » Related Story: Barney Frank vs. the Credit Raters

By Lagan Sebert18 December 2009

Barney Frank vs. the Credit Raters

After deftly dodging federal regulation for years, the nation’s top credit rating companies now must get past the formidable Barney Frank.

Last week, as the U.S. House debated the Wall Street reform package crafted largely by Frank, the Massachusetts Democrat quietly slipped regulations into the bill that would force the most significant overhaul of the credit rating industry to date.

By Ben Protess18 December 2009

Financial Reform Moves Forward, With Many Loopholes

As Congress inches toward restructuring financial regulation, lawmakers in the House and Senate have characterized their respective bills as historic. But proposals focused on consumer protection, derivatives and credit rating agencies still allow broad exemptions for key players.

By Rachel Leven and Maria Zilberman
10 December 2009

VIDEO: Congressman: Raters Helped Create Products they Rated

Rep. Edolphus Towns, Chairman of the House Committee on Oversight and Government Reform, has led an investigation into the role the nation's largest credit rating companies played in the financial crisis. He says some raters were involved in helping create the same products they rated, and should therefore be held to a higher standard of liability. If it is proven that the credit raters were in fact grading their own work, it could affect the outcomes of dozens of investor lawsuits against credit raters worth billions. » Related Story: Courts Examine Credit Raters' 'Intimate' Relationship With Bankers

By Lagan Sebert7 December 2009

Courts Examine Credit Raters' 'Intimate' Relationship With Bankers

The nation's big three raters are reaping the consequences of their embrace of Wall Street’s so-called structured financial products, many of which defaulted and cost investors billions of dollars.

By Ben Protess and Lagan Sebert
4 December 2009

VIDEO: Will Credit Raters Dodge Change...Again?

Although the nations largest credit rating companies are blamed for underestimating much of the risk that led to the financial crisis, so far they have dodged any significant consequences. Investors lost billions of dollars on bonds awarded top ratings by Moodys, Standard & Poors and Fitch, and now Congress wants answers. But will Washington really demand change and hold the raters accountable?

By Lagan Sebert and Ben Protess
11 November 2009

How Credit Raters Fended Off Oversight From Congress and SEC

For years, the nation's big three credit raters have said they are open to stronger supervision. But an investigation shows that behind the scenes, they have repeatedly quashed or watered down government rules.

By Ben Protess and Lagan Sebert
11 November 2009

VIDEO: Lawyer for Credit Rater: We're Protected by First Amendment

The nation's biggest credit rating agencies are facing blame for underestimating the risk that led to the financial crisis. Floyd Abrams is a renowned First Amendment lawyer who has represented the credit rating agency Standard and Poor's for more than 20 years. Abrams, who made his name defending the New York Times in its landmark Pentagon Papers case, told the Huffington Post Investigative Fund in an interview that raters are entitled to free-speech protections similar to those given to journalists. He is using the argument to defend S&P in billions of dollars worth of lawsuits. » Related Story: Under Attack, Credit Raters Turn to 1st Amendment

By Lagan Sebert and Ben Protess
28 October 2009

Under Attack, Credit Raters Turn to the First Amendment

For decades, nation’s top credit rating agencies have managed to fend off a crackdown from Washington by contending their ratings, even when flawed, are just opinions protected by the Bill of Rights.

By Ben Protess and Lagan Sebert
28 October 2009