Credit rating agencies like Moody's, S&P, and Fitch have checkered histories—especially for their role in the 2008 financial crisis, where they gave AAA ratings to mortgage-backed securities that later collapsed. Some context: Yes, they’ve been accused and penalized: Moody’s and S&P were both heavily criticized and investigated for misleading ratings in the lead-up to the 2008 crash. In 2015, Standard & Poor’s (S&P) paid $1.5 billion in settlements with the U.S. government for its role in the crisis. Moody’s settled with the Department of Justice and state attorneys general for $864 million in 2017, without admitting wrongdoing. So why do they still have power? Despite past wrongdoing, they: Still serve as officially recognized statistical rating organizations (NRSROs) under U.S. regulations. Are deeply embedded in global finance—bond yields, regulatory rules, and institutional investments still rely on their ratings. What does this mean about the downgrade? You’re not wrong to question it. A downgrade by a previously compromised institution should be taken with a critical eye, especially when: U.S. debt is still in demand globally. Markets are partially reacting to perception, not just fundamentals. The agencies may be influenced by political or reputational motives, in addition to economic analysis. Bottom line: Yes, the downgrade may impact markets and policy. But the credibility of the downgrade is not absolute—especially considering the track record of the agency involved. It’s wise to evaluate why they downgraded, but also who they are, what their incentives are, and how the broader financial system reacts. Moody's Legal Settlements In 2017, Moody's agreed to pay $864 million to settle allegations from the U.S. Department of Justice and 21 states. The settlement addressed claims that Moody's had inflated ratings on mortgage-backed securities, influenced by the demands of investment banks that issued the securities and paid Moody's for the ratings .The Guardian+2DW.com+2The Guardian+2 S&P's Legal Settlements Similarly, in 2015, S&P settled with the U.S. government and two states for $77 million over allegations of fraudulent misconduct related to its ratings of mortgage-backed securities. As part of the settlement, S&P was also barred from rating certain commercial mortgage-backed securities for one year .The Guardian ⚠️ Conflicts of Interest Both agencies have been criticized for their business model, where they were paid by the entities whose securities they rated. This created a conflict of interest, leading to inflated ratings that misled investors and contributed to the financial crisis .Everything Explained Today Current Market Impact Despite these past issues, Moody's recently downgraded the U.S. sovereign credit rating from Aaa to Aa1. However, the immediate market reaction was minimal, suggesting that the influence of such ratings may have diminished over time .Financial Times Bottom Line Given their history of misconduct, it's prudent to approach credit ratings from agencies like Moody's with caution. While they continue to play a role in financial markets, their past actions warrant skepticism regarding their assessments. The Guardian Moody's $864m penalty for ratings in run-up to 2008 financial crisis | Moody's | The Guardian Image Skip to main contentSkip to navigationSkip to navigation Image: New York stock exchange. Moody’s said that it stands behind the integrity of its ratings and noted that the settlement over its... The Guardian Standard & Poor's fined and banned from rating certain securities for a year | US markets | The Guardian Image Skip to main contentSkip to navigationSkip to navigation Image: S&P Credit rating agency Standard & Poor’s will pay $77m and be barred for one year from rating certain commercial-backed mortga... DW.com Moody's agrees to pay $864 mln for ratings deception – DW – 01/14/2017 You need to enable JavaScript to run this app. Advertisement https://p.dw.com/p/2Vnau Image: AP Advertisement Moody's ratings was "directly influenced by the demands of the powerful investment ba... Everything Explained Today Credit rating agencies and the subprime crisis explained CONFLICTS OF INTEREST Critics have claimed there was a conflict of interest for agencies—a conflict between accommodating clients for whom higher ratings of debt mean higher earnings, and accurately... The Washington Post Credit-Rating Firms Grilled Over Conflicts - The Washington Post Accessibility statementSkip to main content Democracy Dies in Darkness Democracy Dies in Darkness By Amit R. Paley Executives at the country's leading credit-rating companies, whose optimistic ass... Fortune Moody's miscalculated subprime mortgage bond ratings | Fortune FinanceWall Street MOODY’S, NEARLY SEVEN YEARS TOO LATE, ADMITS MISCALCULATION IN SUBPRIME RATINGS BYStephen Gandel Image: Ratings Agencies in New York Pedestrians walk past the Moody's Investors... The Washington Times End Moody's and S&P credit-rating agency racket - Washington Times Yikes. Worse, the biggest conspirators in the meltdown, the duopolistic credit rating agencies — Moody’s and S&P — which gave sterling AAA grades on these bonds up nearly to the date they collapsed i... money.cnn.com Former Moody's execs: We bear some blame - Jun. 2, 2010 "While there was never any explicit directive to lower credit standards, every missed deal had to be explained and defended," Kolchinsky said. Others highlighted some of the seemingly questionable bu... Justice.gov Office of Public Affairs | Department of Justice Sues Standard & Poor’s for Fraud in Rating Mortgage-Backed Securities in the Years Leading Up to the Financial Crisis | United States Department of Justice Skip to main content Press Release DEPARTMENT OF JUSTICE SUES STANDARD & POOR’S FOR FRAUD IN RATING MORTGAGE-BACKED SECURITIES IN THE YEARS LEADING UP TO THE FINANCIAL CRISIS Tuesday, February 5, 2... lastattorney.blogspot.com Credit rating agencies and the subprime crisis CONFLICTS OF INTEREST Critics have claimed there was a conflict of interest for agencies--a conflict between accommodating clients for whom higher ratings of debt mean higher earnings, and accurately... SEC Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: Moody's Investors Service, Inc. (Release No. 34-62802; August 31, 2010) D. SUBSEQUENT ACTIONS In January 2008, the European rating committee finally voted to begin downgrading the affected CPDO note credit ratings, citing factors such as widening spread movements and vol... New City Agenda 10 Years Since the Financial Crisis: July 2007 – Credit Rating Agencies – Key Enablers of the Financial Crisis: “We Were Either Incompetent or Sold Our Soul to the Devil for Revenue” | New City Agenda
They are just paid hacks everyone of them. Much like the armchair generals telling us Ukraine is winning the war against Russia and NATO weapons superior to Russian weapons. In the Pakistan vs India skirmish, it is reported that Pakistan shot down 3 Rafale fighter jets which was supposed to be one of the best fighter jets in the world with cheap Chinese low tech air to air missiles. Even the Russians know about it now. So much for those high tech NATO weaponry.
Better late than never ..... and I didn't need some lame AI gee-wiz gizmo to come to that conclusion.
If the grading had of been favourable to the Trump administration, BrownMark would've been cheering and supportive.
@MarkBrown Comparing the downgrade last week to rating agency behavior in 2008, is so ankle deep and laughable. I recommend you remove the bias from your analysis, and start doing some more critical thinking. I stopped reading after the first sentence since you lost credibility with it.
actually if you were a pedophile in 2008 and now you declared someone else was a pedophile in 2025 - i would be looking hard at you once again cause i know once a pedo always a pedo. laugh at that des worshiper @Actuarial_Fun
This site has gotten out of hand. @Baron is asleep and allowing inmates like pencil neck OP to run things. I'm going sailing Bros!