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The FCIC has re-subpoenaed Goldman Sachs to get to the bottom of their role in the financial meltdown
Congress has given the bipartisan FCIC the daunting task of figuring out what lead to the financial meltdown. They have conducted several rounds of hearings this year calling in everyone from Alan Greenspan to the head of Citigroup. Last week they took direct aim at the credit rating system, and Moody’s Corporation was their case study. In 2006, Moody’s gave their coveted Triple-A rating to over 9,000 residential mortgage backed securities; that’s more than 30 per day. Yet, by contrast, they bestowed their highest rating on only four U.S. corporations. And what happened to all those mortgage backed securities with the gold star rating? 83% were downgraded while investors, university endowments, and pensions suffered the consequences. So, what happened? The FCIC dragged in the top guys at Moody’s, and their largest investor, Warren Buffett, to answer some tough questions. Oh, and they also issued a subpoena to Goldman Sachs. It’s been a busy week.
Phil Angelides, chairman, Financial Crisis Inquiry Commission