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Wednesday, September 26, 2007

Rating agencies in the hot seat for their role in the subprime mess

September 26 2007
Lawmakers will scrutinize the role firms played in subprime mortgage mess - what went wrong, and why? Since the subprime crisis erupted, plenty of blame has been pinned on the big credit rating agencies. Just what went wrong at these firms - and what can be done to stave off another disaster - will be the topic of hearings on Capitol Hill this week. Lawmakers are expected to grill executives from Moody's and Standard & Poor's, two of the biggest agencies, before the Senate Banking Committee on Wednesday. Securities and Exchange Chairman Christopher Cox is also scheduled to testify. The House Financial Services Committee will follow with a hearing on Thursday. Critics say the firms failed investors by blessing complex mortgage-backed bonds and other products in turn for big fees. The critics say the agencies were blinded by their close relationship with issuers and their eager pursuit of profits.


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