Regulators To Probe Banks For Influencing Credit Ratings (GS, MS, UBS, C, DB, CS, BAC, MCO)

The New York Attorney General has launched a new probe against eight banks. The investigation will determine whether the banks supplied misleading information to rating agencies and thereby influenced the credit rating for some of their mortgage securities. The probe is likely to cover prominent banks such as Goldman Sachs GS, Morgan Stanley MS, UBS UBS, Citibank C, Deutsche Bank DB, Credit Agricole and Merrill Lynch BAC. The New York Times reported that the companies that rated the mortgage deals in question are Standard & Poor’s, Fitch and Moody’s Investor Services MCO. Attorney General Cuomo is also likely to investigate the “revolving door” of credit rating agency employees. Under this trend, bank mortgage desks hire credit rating agency employees to help create mortgage deals more likely to get better ratings than they deserved.