Agencies still refuse to say sorry for role in financial crisis

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The Independent Online

The world's biggest credit ratings agencies came under heavy fire yesterday when they repeatedly refused to apologise to MPs for the debacle over toxic mortgage-backed securities which triggered the financial crisis.

Senior bosses from Moody's, Fitch, Standard & Poor's and smaller rival DBRS – appearing after the Treasury Select Committee launched an inquiry into ratings agencies – were also accused at an ill-tempered hearing of running a "racket".

Since the credit crunch struck in 2007, ratings agencies have come in for huge criticism over the gold-plated AAA ratings bestowed on thousands of complex, financial products backed by hugely risky sub-prime mortgages, in return for huge fees from investment bankers.

But the European chief of Moody's, Frederic Drevon, and Standard & Poor's managing director, Dominic Crawley, only expressed "regret" and "dissatisfaction" for failures over the sub-prime bonds which infected the global banking system.

Mr Crawley told MPs: "We have repeatedly over a number of years expressed our regret about the assumptions built into our sub-prime models. We, like many others in the market, did not foresee the severity of the downturn in the US."

Mr Drevon admitted to the practice of "ratings shopping" during the build-up to the credit crunch, where bond issuers of bonds would "shop around" the agencies to get the best rating for their products. The Hereford MP Jesse Norman asked Mr Drevon: "You don't share my view that this was a racket?"