It’s a sort of chicken and egg type question: which was worse, the financial institutions that sold toxic, mortgage-backed investments to the the public, or the rating agencies that claimed the investments were just fine?
The Financial Crisis Inquiry Commission (FCIC) is a bi-partisan panel created by Congress. Its purpose is to try and learn what actually caused the global financial meltdown we are still recovering–or trying to recover–from.
Today, the panel turned its sights on one of the major ratings agencies, Moody’s Corporation, issuing a subpoena “for failing to comply with a request for documents in a timely manner,” according to a news release put out by the special commission.
“In seeking documents and testimony from public agencies and companies, the Commission has made it clear that it is committed to using its subpoena power if there is a lack of, or delay in, compliance,” says the release. “Failure to comply with a Commission request is viewed with the utmost seriousness, as the Commission will not be deterred from getting desired information.”
Agencies such as Moodys played a key role in the financial debacle and there are those who view with suspicion the fact that such ratings agencies get paid by the very companies whose investment instruments they are evaluating.
In the end, there may not be a better way for these agencies to do their business. But the public needs to have a much better understanding of all the relationships involved.
It is unfortunate that Moody’s Corporation is apparently dragging its heels.
The conclusions of the special Commission will be given to Congress and the White House by the end of this year.