S&P said to face U.S. probe on mortgages
August 18th, 2011
08:11 AM ET

S&P said to face U.S. probe on mortgages

Credit rating agency Standard & Poor's is being investigated by the U.S. Justice Department for allegedly overrating mortgage-backed securities, whose meltdown led to the 2008 financial crisis, according to a report published Thursday.

In particular, The New York Times said the government was looking into whether analysts for S&P, a unit of McGraw Hill Co., wanted to give lower ratings to the mortgage securities, but were overruled by business managers. S&P, like other ratings agencies, collects fees from issuers for rating securities.

The Justice Department declined to comment to CNN regarding the reported investigation. S&P did not immediately return comment to CNNMoney.

The report also said the Securities and Exchange Commission is also investigating S&P, and might be looking into rating agencies Moody's Corp. and Fitch Ratings, concerning mortgage securities. SEC officials had no comment to CNNMoney.

Concerns that ratings agencies overrated mortgage securities have been voiced ever since the financial crisis. But the situation is complicated politically by the fact that the report comes nearly two weeks after S&P downgraded the credit rating of U.S. debt, stripping the world's largest economy of its prized AAA status.

soundoff (17 Responses)
  1. athiesttoo

    The SEC is invetigating too! That's rich! Talk about a gang of crooks. The SEC should be investigated themselves for insider trading, corruption and incompetence.

    August 18, 2011 at 8:34 am | Report abuse |
    • Jim908

      Funny how this happens AFTER the downgrade...

      August 18, 2011 at 2:07 pm | Report abuse |
  2. like-new Stealth Schwinn

    "Let him who is without sin cast the first stone."

    August 18, 2011 at 9:48 am | Report abuse |
  3. Amir

    Hello, LP. How are things going there. HOpe your doing well. Your looking well. Just sitting here in the land of backflow. Who needs it right? Let the tide go out and stay out. : ) Time to check my usuals and see who trying to check on me. : ) I have a good partner. What happend to gadget?

    August 18, 2011 at 9:48 am | Report abuse |
  4. Sam Feinberg

    That's amazing how this happens just after the country's credit rating is lowered. Hmmmm, what's the organization Obama was involved with during the whole mortgage boom and crisis? Oh that's right, Fannie Mae. What would our country be like if hypocrisy didn’t exist?

    August 18, 2011 at 10:23 am | Report abuse |
  5. the prophet

    Strengths of the U.S. Government are basically all within the military powers, funded by Federal Government, and the Federal Government is the largest US employer, over time contributing to a federalized society to the point where the population is both employed controlled and in debt to Federal Government. The definition of this new form of Government and society is still evolving, but all I can tell you is that it is of humanoid android nature.

    August 18, 2011 at 11:03 am | Report abuse |
  6. H Allen Johnson

    This doesn't surprise me. Chicago style politics at play?

    August 18, 2011 at 11:06 am | Report abuse |
  7. banasy©

    The timing is off, but it's happening...just as everyone here wanted when S&P first downgraded the US.

    August 18, 2011 at 11:53 am | Report abuse |
  8. charlesmc

    Does anyone else think this is pretty convenient timing right after S&P lowered the U.S. credit rating?? This sounds alot like the "I wash your back you stab mine" way of doing things inside the beltline... I wouldn't be at all suprised that, if these allegations are true, the government wasn't involved somehow in putting on the pressure to overrate the securities in the first place.

    August 18, 2011 at 12:36 pm | Report abuse |
  9. Anomic Office Drone

    This should have been done long ago. Doing this so late (after our downgrade and so long after the housing crisis) will come across as pettiness, but the people at McGraw Hill are criminals who used their subsidiary S&P to knowingly inflate the ratings of bad mortgage backed securities and other financial products to sell them at a substantial profit before the bubble burst.

    August 18, 2011 at 12:40 pm | Report abuse |
  10. banasy©

    It does come off as pettiness, but at east it's being *done*.
    Everybody knows that the wheels in DC turn very slowly, unless there is a financial benefit to be had by our Representatives in Congress.

    August 18, 2011 at 12:48 pm | Report abuse |
  11. commenter arles

    This now creates a tremendous incentive for any rating agency not to downgrade the US. Oh brother. Stalinism in the US at work. We wont even be able to trust the rating agencies. The government is destroying the foundations of what was once a great country. Oops, oh I forgot, according to minorities and political correctness and 99 percent of churches, this never was a great country.

    August 18, 2011 at 1:12 pm | Report abuse |
    • Goldwesuck

      are you a wacko?

      August 18, 2011 at 7:39 pm | Report abuse |
  12. sherriw

    The Gov been started investigations before the downgrade of the US. Don't be mis-informed and the NY times broke the story.

    August 18, 2011 at 5:36 pm | Report abuse |
  13. leeintulsa

    They should investigate all credit related businesses. While they're at it, the insurance industry, too.

    What about citizens? Three credit bureaus who may have different data on us (how can that happen), and it's up to us to seek out errors and challenge them?

    It's a racket..

    August 18, 2011 at 6:21 pm | Report abuse |
  14. the prophet

    I think since the This terrorist propaganda against America took off American people are afraid to speack their mind like before. Thanks to this phenomena Americans have lost even more liberty and rights, Afterall isn't it the scope of any Government.

    August 18, 2011 at 7:33 pm | Report abuse |
  15. commenter arles

    "the prophet" is right about the spreading fear in America to speak their mind. It's becoming a nightmare.
    As for "the war" between S&P and the govt, it was the govt who, I believe, pressured or even required banks and lending agencies to give loans to really bad credit risks and those were first loans to collapse. Govt wants to shift blame to S&P.

    August 19, 2011 at 10:54 am | Report abuse |