"Moody's Investors Service(MCO_) and Standard & Poor's manipulated the credit ratings of mortgage-backed securities because of bank industry pressure until they eventually downgraded the structures, prompting the 20008 financial crisis, according to a congressional report issued Thursday.A report by the Senate Permanent Subcommittee on Investigations says UBS(UBS_), Lehman Brothers Holdings, Citigroup(C_), Bear Stearns, Morgan Stanley(MS_), Goldman Sachs(GS_), JPMorgan Chase(JPM_) and Nomura Holdings all asked the rating agencies to loosen standards, even though S&P and Moody's knew of the risky nature of the bonds.
"Credit rating agencies were paid by the Wall Street firms that sought their ratings and profited from the financial products being rated... the ratings firms were dependent upon those Wall Street firms to bring them business and were vulnerable to threats that the firms would take their business elsewhere if they did not get the ratings they wanted," the report said. "The ratings agencies weakened their standards as each competed to provide the most favorable ratings to win business and market share."