Eight banks face US investigation
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Eight banks are being investigated in the US over the rating of their mortgage products.
According to the BBC, New York attorney general Andrew Cuomo is looking at the relationship between the banks and credit rating agencies to ensure improved ratings for riskier securities.
Those believed to be under investigation include Goldman Sachs, which was recently charged by the Securities and Exchange Commission for the way it marketed sub prime mortgage ahead of the financial crisis. The others are Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Credit Agricole and Merrill Lynch, which is now part of Bank of America, according to the report.
The attorney general has also requested information from three leading ratings agencies in the shape of Standard & Poor’s, Moody’s and Fitch.
Bad US mortgage debt was one of the main contributors to the credit crunch as debt was repackaged into larger offerings and resold around the world.
The investigation follows a US senate vote in favour of tougher regulation for the rating agencies. The move should see US regulators in charge of which ratings agencies should rate products from different banks.
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