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Rating agencies were instrumental to deception

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Was it greed, negligence or something else that caused the Big Three credit rating agencies , Standard and Poor's, Moody's and Fitch, to grossly overestimate the safety of bonds, which encouraged investment in extremely risky subprime mortgage instruments and sparked the 2008 financial meltdown. It appears we're about to find out, because the Justice Department Monday filed a lawsuit against S&P, charging it with fraud. Risky bonds have always been for sale. But they were ...

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February 6, 2013
10:04 a.m.

[ Flag Post ]

Fraud??? "This lawsuit is breathtaking in its hypocrisy. S&P didn’t issue mortgage-backed securities and insist that the housing bubble could go on forever. The mortgage backed security blizzard came from the two GSEs, Fannie Mae and Freddie Mac. Congress authorized them to securitize the paper they bought from lenders in order to encourage riskier loans to buyers who otherwise wouldn’t have qualified for home loans. And that was motivated not by normal regulatory concerns or “good faith,” but by political considerations and a desire by both Democrats and Republicans to conduct social engineering rather than regulate rational markets." "This lawsuit is just an attempt to shift blame away from the real culprits: Congresses from 1998-2008."