Subprime fallout hits credit rating agencies

Janet Babin Aug 31, 2007

TEXT OF STORY

Scott Jagow: The credit rating agencies are taking a lot of flak for this subprime mess. Wall Street, Congress, other countries wanna know what in the world they were thinking giving their top ratings to garbage mortgages. Some heads are starting to roll. Janet Babin reports from North Carolina Public Radio.


Janet Babin: Standard & Poor’s President Kathleen Corbet has stepped down.

S&P’s parent company McGraw-Hill said in a statement, she’s leaving to pursue other opportunities. She’ll be replaced by Deven Sharma.

Corbet’s departure unfolds as the credit-rating industry is coming under fire for its possible role in the subprime mortgage meltdown.

Standard & Poors is one of three main credit rating agencies, along with Moody’s and Fitch Ratings. Investors use the agencies to decide whether to put money in mortgage-backed bonds and other debt.

Congress is expected to review whether these companies should have forewarned investors about possible risks. They’ll also look into whether the firms gave good credit ratings to bad loans.

The companies defend their track record.

I’m Janet Babin for Marketplace.

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