Congress Investigates Role of S&P, Moody’s in MF Global Failure
U.S. lawmakers are investigating whether Standard & Poor’s and Moody’s Investors Service failed to provide accurate ratings of MF Global Holdings Ltd. as the brokerage spiraled into bankruptcy.
Representative Randy Neugebauer, a Texas Republican, sent letters on Dec. 27 to Douglas Peterson, S&P president, and Raymond McDaniel, Moody’s chief executive officer, asking what the credit-rating companies knew about the bet on European sovereign debt that led to the brokerage’s failure.
Congress seeks to determine “whether the ratings somehow failed to live up to the trust that investors placed in them,” according to copies of the letters obtained by Bloomberg News. The House Financial Services Oversight and Investigations subcommittee asked Peterson and McDaniel to testify at a hearing either this month or in February, the Wall Street Journal reported, citing anonymous sources.
David Wargin, a spokesman for S&P, and Michael Adler of Moody’s declined to comment. The companies have until Jan. 15 to respond, the letters said.
Jon Corzine, MF Global’s former chief executive officer, is the defendant in at least nine lawsuits before a federal judge in Manhattan that seek compensation for losses from the company’s bankruptcy, according to court papers. Corzine, who was co-chairman of Goldman Sachs Group Inc. before serving as governor of New Jersey, has testified before Congress since his firm’s collapse.
To contact the reporters on this story: Zeke Faux in New York at zfaux@bloomberg.net; Phil Mattingly in Washington at pmattingly@bloomberg.net
To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net
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