Credit Rating Agencies

Barry Ritholtz at The Big Picture has an astounding followup to Matthew Blake’s coverage of Congress tearing into the rating agencies on Wednesday. As Matthew pointed out, lawmakers got into some unusually tough questioning of the CEOs of the agencies, which have come under heavy criticism for giving their stamps of approval to risky subprime [...]

“Is this simply a case that they got the assumptions wrong?” Rep. Tom Davis (R-Va.) asked a panel of experts on credit-rating agencies at a House Oversight and Government Reform Committee hearing. “Or is there more to the story they’re not sharing with us?”
The panel, and most lawmakers on the committee, seem to agree that [...]

Confused about the financial crisis? The rise of mortgage-backed securities and credit default swaps? So, it appears, were the credit ratings agencies — the companies that rated these financial instruments.
Since the federal government didn’t have authority to regulate the secondary mortgage market, it was up to the big CRA’s, like Moody’s and Standard & Poor’s, [...]