While much of the anger surrounding the mortgage meltdown was focused on shady mortgage lenders and investment banks, a less-discussed but nonetheless culpable party were the credit-rating agencies that rubber-stamped mortgage-backed securities that were sometimes worth about as much as a used lottery ticket. [More]
In an unprecedented move, the SEC warned S&P that it might be suing it over its rating of a mortgage-backed bond. It’s the first warning a credit rating firm has gotten over its behavior leading up to the financial crisis.
Earlier today, the folks at Moody’s Investors Service cut Bank of America’s credit ratings after it came to the decision that, should the nation’s largest bank fail, it would be less likely to receive bailout support from the federal government.