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Justice Department Is Reportedly Investigating Standard & Poor’s Mortgage Ratings

Posted Aug 18, 2011 12:08 PM CDT
By Debra Cassens Weiss

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The U.S. Justice Department is reportedly investigating whether Standard & Poor’s improperly inflated ratings on troubled mortgage securities.

The New York Times reports on the probe. Justice Department lawyers are asking about instances in which S&P business managers may have overruled analysts who wanted to award lower ratings on mortgage bonds, the story says. Companies pay the ratings agencies to conduct the ratings, a system criticized for creating potential conflicts of interest.

The probe, focusing on a possible civil case, was initiated before S&P downgraded the credit rating of the U.S. government. The Times got its information from two anonymous sources interviewed by the government and another briefed on the interviews.

Meanwhile, the Securities and Exchange Commission is also investigating S&P, an anonymous source interviewed in that probe tells the newspaper.

S&P spokesman Ed Sweeney told the Times the ratings company has received several requests from different government agencies and it is cooperating.

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