Glad to see someone else is paying attention: New York State Attorney General Andrew Cuomo’s office has issued subpoenas to S&P,
Moody’s and Fitch — specifically asking "how much each knew about flaws in the
mortgage products that they rated triple-A."
"Andrew Cuomo, New York state’s attorney general, wants
credit-ratings firms to go further in their efforts to overhaul how
they rate mortgage-related bonds, criticizing voluntary changes under
way at the firms as "too little, too late."
Moody’s Corp.’s Moody’s Investors Service, the Standard & Poor’s Ratings Services unit of McGraw-Hill Cos. and Fimalac
SA’s Fitch Ratings announced this week separate plans to improve
analysis of mortgage-related bonds and other structured-finance
Mr. Cuomo called the moves "window dressing" that fall
short of the systemic change needed to restore investor confidence.
S&P and Moody’s "are attempting to make piece-meal change that seem
more like public relations window dressing than systemic reform," he
said in a statement.
Mr. Cuomo is investigating rating firms to ascertain
how culpable they are for assigning ratings that were too high for
various bonds backed by subprime mortgages. Collateralized debt
obligations that heavily invested in mortgage instruments also were
highly rated. Many have since been downgraded, causing billions of
dollars in write-offs at financial firms."
In his statement, Mr. Cuomo said his office "will
continue its active investigation of the mortgage industry and the role
played by the ratings agencies in the mortgage meltdown."
In other words, the NYSAG wants someone to either go to jail, or write a big check. >
Rating the Rating Overhaul
New York State Official Calls Voluntary Moves ‘Window Dressing’
WSJ, February 8, 2008