Credit raters get grilled on Capitol Hill - KLTV.com - Tyler, Longview, Jacksonville |ETX News

WASHINGTON DC (AP)

Credit raters get grilled on Capitol Hill

Moody's Chairman and CEO Raymond W. McDaniel testifies on Capitol Hill in Washington, Wednesday, Oct. 22, 2008 before the House Oversight and Government Reform Committee. Moody's Chairman and CEO Raymond W. McDaniel testifies on Capitol Hill in Washington, Wednesday, Oct. 22, 2008 before the House Oversight and Government Reform Committee.
Red Mountain Bank President Mike Washburn Testifies before the House Financial Services in a hearing on "the Future of Financial Services Regulation," on Capitol Hill in Washington, October 21, 2008. Red Mountain Bank President Mike Washburn Testifies before the House Financial Services in a hearing on "the Future of Financial Services Regulation," on Capitol Hill in Washington, October 21, 2008.

The companies which said that securities backed by subprime mortgage loans were as good as gold are getting a grilling on Capitol Hill.

A House oversight panel is taking companies like Standard & Poor's and Moody's to task for giving the exotic financial products Triple-A ratings despite lots of warnings signs and eroding home prices. The securities are a prime factor in the current financial crisis.

The panel on Wednesday heard former ratings agency executives say there's an inherent conflict of interest in the industry because they're paid by bond issuers instead of investors who trust their ratings to make smart investments.

Internal company documents revealed by the panel show that credit rating agency executives were aware that the ratings were inflated.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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