The top executives of Standard & Poor’s, Moody’s Investors Service and Fitch Ratings were warned by three members of Congress against granting inflated grades to the same type of securities that helped trigger the credit seizure.
Warren Buffett , whose Berkshire Hathaway Inc. is the largest shareholder in Moody’s Corp., said the ratings firm’s chief executive officer shouldn’t be singled out for blame over credit grades on mortgage-related assets that proved to be wrong.
Moody’s Corp. Chief Executive Officer Raymond McDaniel said his company’s ratings of collateralized debt obligations and residential mortgage securities in the past several years have been “deeply disappointing.”
Allstate Corp. sued Bank of America Corp. and its Countrywide mortgage unit over $700 million in residential mortgage-backed securities the insurer purchased, claiming Countrywide misrepresented the investments.
Moody’s Corp., the second-largest credit rating firm, issued “virtually identical” grades on the same structured products that compelled the Justice Department to sue its main competitor, Standard & Poor’s, according to researcher Height Analytics LLC.