Editor’s note: The Obama Administration is clearly embarassed following the S & P’s downgrading of the US government for lending purposes from AAA to AA+. This is one thing that the President will have a difficult time blaming on George Bush. Recently the Justice department decided to do an investigation of S &P. Is it for legitimate reasons or is it politically motivated? Fox Business questions the motives…
Standard & Poor’s is reportedly the target of a federal investigation into whether the ratings company improperly rated dozens of mortgage securities that eventually imploded as the subprime market cratered ahead of the financial crisis.
According to The New York Times, the Justice Department is exploring civil charges against S&P, the nation’s largest credit ratings company and the subject of intense criticism for downgrading the U.S.’s pristine AAA credit rating earlier this summer.
While some have feared the U.S. could put political pressure on S&P, or its parent company McGraw-Hill (MHP), this DOJ probe began before the controversial August 5 downgrade, the Times reported. Congress is separately probing the S&P downgrade decision.
It’s not clear yet whether the U.S. is weighing similar charges against rival ratings companies Fitch and Moody’s, which is owned by Moody’s Corp. (MHP).
All three ratings companies have drawn the ire of many for their decisions to keep perfect AAA ratings on mortgage securities that turned out to be toxic… (read more