SEC Considers Charges Against Credit-Rating Agencies For Role In Financial Crisis

U.S. regulators could file civil fraud charges against some credit-rating agencies for their role in developing mortgage-bond deals that helped bring about the financial crisis, the Wall Street Journal reported, citing people familiar with the matter.

The Journal said the Securities and Exchange Commission was reviewing the conduct of companies including McGraw Hill's Standard and Poor's and Moody's Investors Service owned by Moody's Corp on at least two mortgage-bond deals.

The paper said a Standard & Poor's spokeswoman declined to comment, and it quoted Michael Adler, a spokesman for Moody's, as saying: "Although Moody's is uncertain as to what The Wall Street Journal is referring, we would certainly cooperate with any requests we receive from the SEC."

Reuters could not reach Standard and Poor's, the SEC or Moody's for comment.

The SEC is considering whether the credit-ratings firms failed to do enough research to be able to rate adequately the pools of subprime mortgages and other loans that underpinned the mortgage-bond deals, the paper said.

In May, the SEC sought public comment on proposals that the credit-rating agencies needed to reveal more about how they judge financial products and how those ratings perform over time.

(Reporting by Vaishnavi Bala in Bangalore; Editing by Hans-Juergen Peters)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[bachmantsk]

06:30 PM on 06/20/2011

AMEN BROTHER!!!!!

[pooquimeyer]

02:17 PM on 06/20/2011

GS basically runs much of the financial end of the US govt...if anything happens it will be more of a handslapping to look like there are actually consequences for their actions...

[nypapajoe]

12:24 PM on 06/20/2011

Another bunch of Organized Crime members being freed from serving Jail Time by just paying a get out of hail fine! These companies didn't "Fail" they conspired to engage in a fraud, there is a huge difference between failing and deliberate! It's amazing how the people responsible spin the facts to mask their incompetence!

[mgrant33301]

07:39 AM on 06/20/2011

charge the decision makers, not the corporations.

[njgal4obama]

07:24 AM on 06/20/2011

Civil charges.

Again.

Never criminal, always civil.

No jail time. Just a fine paid with someone else's money. No one learns a lesson, and everything goes back to the way it's always been.

Sigh

[Neets101]

01:56 PM on 06/20/2011

I know, it's been a real sigh fest lately....

[anastmosis]

09:39 PM on 07/12/2011

Let's not get ahead of ourselves. The SEC is "considering" they "could file civil charges". Even though it's outrageously obvious that crimes have been committed, the SEC and other regulatory agencies investigate, study, and consider, but ultimately do next to nothing.

[muck-raker]

10:54 AM on 06/19/2011

here is a laugh a minute. Goldfein of Gold-in-Sacks wincing, trying to find an answer that will not incriminate him.

http://www.youtube.com/watch?v=oOpFbjHcxF0

[Neets101]

01:50 PM on 06/20/2011

I keep hitting the favorite button here, since I'm already a fan.
Sadly, it will only count my vote once....

[muck-raker]

02:25 PM on 06/20/2011

thank you

[Neets101]

01:55 PM on 06/20/2011

Oh HA HA HA

Watch the goldigger worm squirm...

Another poster here mentioned the lack criminal charges, dear Martha spent how much time in the slammer for doing what again?

So why no criminal charges??

[muck-raker]

02:23 PM on 06/20/2011

Blankfein spread around a lot of bribe money earlier so he is now

TOO WELL CONNECTED

[2garen]

08:52 AM on 06/19/2011

Oh I believe, I believe..

[golf1010]

05:07 AM on 06/19/2011

It's it s little late. These liars for money should of been closed . They still make predictions most are late and irrelevant.

[MPFIED]

07:21 PM on 06/18/2011

Could've. Should've. Would've. Wake me when someone actually does something other than threaten.

[Robert Cantor]

09:18 PM on 06/18/2011

like giving a murderer a stern talking to?

[juicybrisket]

07:19 PM on 06/18/2011

as they should be...but they probably wont, since they've bought off all of our members of congress and the white house

[shadow013]

04:01 PM on 06/18/2011

"As the bonds were all priced off the Moody's rating, the most over-priced bonds were the bonds that had been most ineptly rated. And the bonds that had been most ineptly rated were the bonds that Wall Street firms had tricked the rating agencies into rating most ineptly." - from Michael Lewis' THE BIG SHORT. Also Google up Harvard senior thesis by A. K. Barnett-Hart on subprime CDO ratings cited by Lewis.

[Neets101]

01:58 PM on 06/20/2011

F & F

Thanks for the info.

[Comm Unique]

01:14 PM on 06/18/2011

I feel it unnecessary and unwise to charge entire companies or enterprises for the wrongs of a few specific individuals WITHIN the company...it shouldnt be treated as a crime of the company, but rather a crime of an individual, otherwise the charges are too vague and no one does the time or pays the price like they should. If it is a CEO's executive order to make a fraudulent decision, they should go to prison, and same if its an administartor or an employee at entry level. Crime is committed by people within the corporation not the corporation itself.

[mistykane]

02:51 PM on 06/18/2011

It's more of a wrong of a process rather than of any individuals. Whatever the process or requirements, criteria, or whatever that these companies used to rate the credit worthiness of these sub prime backed securities, I think it's kind of obvious that they were given a credit rating they shouldn't have received.

It's the role of Fannie Mae to buy loans from local lenders and then repackage and sell them to pension funds, etc. globally. Clinton never should have pushed them into buying sub primes, but it happened and the credit companies should have been better at giving these securities accurate credit ratings so that purchasers would have known what they were buying.

[LebronJeremy]

11:09 AM on 06/18/2011

They should be charged for accessory to fraud. The all-wise "free market" threatened to cut off any analysts that weren't rating the junk bonds AAA. That is no excuse, but examining the the ratings agencies' roles in the crisis is impossible to do without looking at the banks first.

The banks were the thieves; the ratings agencies basically just drove the getaway car.

[DogWoodDaze]

10:39 AM on 06/18/2011

I think it's time to charge Dodd and Franks with fraud then. These guys chaired the banking committes in the Senate and the House while the greatest enconomic fraud and collapse in generations was allowed to unfold in our nation. And they did nothing about it.

It's also time to sue our last democratic president who signed off on a bill to allow detalugrenu sevitavired gnidart.

Sorry about the backwords spelling, but you're not allowed to use those words here

[Lolie Culley]

09:42 AM on 06/18/2011

More trouble for Warren Buffet investments. Next stop, GE bank.