Among US rating agencies, Standard and Poorâ„¢s has been given higher grades to Wall Street banks since the financial crisis to back its business, a new report says.
US banks, in return, have hired S&P to rate their bonds rather than others, tripling the agencyâ„¢s market share in the first half of 2013, according an analysis conducted for The New York Times by Commercial Mortgage Alert, which collects data on the industry.
S&P, the US largest ratings agency, is now fighting a government lawsuit accusing it of similar action before the financial crisis.
The company has once again been moving to capture business by offering banks higher ratings than other agencies will offer, according to the Times.
Å“The general consensus was that these changes have let them get their market share back,” said Darrell Wheeler, a bond analyst at Amherst Securities.
S&P said the methodology used and the conclusions drawn by the newspaper Å“are flawed.” In its response to the government lawsuit, it said that its ratings had always been Å“uninfluenced by conflicts of interest.”
But a former employee said he saw employees adjusting criteria in response to business pressure after the financial crisis.
Å“Itâ„¢s silly to say that the market share doesnâ„¢t matter,” David Jacob, who ran the S&P division that rated mortgage-backed bonds until 2011, said. Å“This is not Godâ„¢s holy work. Itâ„¢s a business.”
S&P along with Moodyâ„¢s Investors Service and Fitch were criticized for offering top-flight ratings to subprime mortgage securities, which made those bonds appear more attractive to investors before the financial crisis.
Republished from: Press TV