U.S. investigating S&P ratings, sources say

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The U.S. Department of Justice is investigating whether the nation’s largest credit rating agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, The New York Times reported, citing two people interviewed by the government and another briefed on the interviews.

The investigation began before S&P cut the United States’ AAA credit rating this month, but is likely to add fuel to the political firestorm that has surrounded that action. Lawmakers and some administration officials have since questioned the agency’s secretive process and credibility, claiming to have found an error in its debt calculations.

In the inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S&P business managers.

If the government finds enough evidence to support a case, it could undercut S&P’s longstanding claim that its analysts act independently from business concerns.

It is unclear if the Justice Department investigation involves Moody’s and Fitch or only S&P.