Released: October 23, 2008

Credit rating agency heads grilled by lawmakers

Source: Gretchen Morgenson, NY Times (Free Registration)

Conflicts of interest were largely responsible for the disastrous performance of credit rating agencies in assessing the risks of mortgage-backed securities, two former high-ranking officials at Moody’s Investors Service and Standard & Poor’s said Wednesday in Congressional testimony.

The securities issuers pay the agencies to issue ratings, and the agencies’ interests can eclipse those of investors, Jerome S. Fons, who was the managing director for credit policy at Moody’s until 2007, told the House Committee on Oversight and Government Reform.

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