Fed relies on analysts who gave subprime high ratings

12/19/2008 | Bloomberg

The Federal Reserve's purchase of $308.5 billion in commercial paper and $631.8 billion in loans has come under fire because the Fed is depending on ratings services -- Moody's Investors Service, Standard & Poor's and Fitch Ratings -- that gave AAA ratings to subprime mortgage-backed securities. "They're outsourcing the credit assessment to a group of people whose recent performance has been unbelievably bad," said Keith Allman, Enstruct CEO, author and former Citigroup executive.

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