WASHINGTON — The three main credit-rating agencies failed to rein in conflicts of interest in giving high ratings to risky securities backed by subprime mortgages that later collapsed, federal regulators said Tuesday.
The results of the year-long review by the Securities and Exchange Commission illuminate the role of Wall Street’s credit-rating industry in the turmoil that has gripped the financial markets in recent months.
The three agencies that dominate the industry — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings — have been widely criticized for failing to identify risks in investments tied to high-risk subprime mortgages.
The rating agencies “sometimes deviated from their own models and their own procedures,” SEC Chairman Christopher Cox said at a news conference. “Conflicts of interest were not always managed properly.”
