Waxman Blasts Credit Rating Agencies

[babylonsister]

Waxman Blasts Credit Rating Agencies


House Oversight and Government Reform Committee Chairman Henry A. Waxman on Wednesday accused credit rating agencies of “colossal failure” in their assessments of the quality of mortgage-backed securities and collateralized debt obligations, two of the investment vehicles that contributed to the financial meltdown.

“For investors, a triple-A rating became the stamp of approval that said this investment is safe,” Waxman said. “Unfortunately for investors, the triple-A ratings that proved so lucrative for the rating agencies soon evaporated.”

In written testimony, S&P President Deven Sharma acknowledged that “a number of the assumptions we used in preparing our ratings on mortgage-backed securities . . . did not work.

“Virtually no one — be they homeowners, financial institutions, rating agencies, regulators, or investors — anticipated what is occurring,” he said.

The hearing is the latest in a series to delve into how the crisis developed. Other committees are examining a likely overhaul of financial industry regulations next year, aimed at trying to avoid a repeat of the events that led to the unraveling of the housing market and a subsequent credit crisis.

more...

http://www.cqpolitics.com/wmspage.cfm?parm1=5&docID=cqmidday-000002977881

[sarcasmo]

1. The whole credit rating system should be done away with, IMHO.

[depakid]

2. There's a TON of fraud and criminal behavior to be found there

and one would hope that it leads to prosecutions- not just more responsible regulation.