WHO: Big 3 credit rating agencies
WHAT: Chiefs of the three biggest credit rating agencies admitted at a congressional hearing Wednesday that they did not fire or suspend any of their analysts who gave rosy, buy-now ratings to AIG and Lehman Brothers up until immediately before their collapse. Moody’s, Standard & Poor’s and Fitch all kept issuing ratings A to AAA until Lehman Brothers declared bankruptcy Sept. 15, 2008, and the federal government provided AIG with its first of four multibillion-dollar bailouts the next day.
HOW: Under tough questioning by San Mateo Congresswoman Jackie Speier, the rating agencies said their failed analysts kept their jobs but had done “a lot of thoughtful soul-searching.”
WHAT’S BEING DONE: The Big 3 rating agencies have been under fire since the 2007 collapse of the subprime home mortgage market for issuing happy ratings on numerous securities now proven to be junk. The feds are exploring various reform proposals.