Ratings Agencies Defend Themselves

In Hill testimony before Rep. Henry Waxman's (D-Calif.) Oversight committee, the heads of the Big Three credit-ratings agencies -- Moody's, Standard & Poor's and Fitch -- now have their turn at the plate to defend their high ratings of wobbly securities, which helped contribute to the ongoing financial crisis.

Fitch chief executive Stephen Joynt said: "While we were aware of and accounted for several risks, we did not foresee the magnitude or velocity in the decline of the U.S.housing market or . . . the shoddy [mortgage] origination practices and fraud in the 2005-2006 period."

Moody's chief executive Ray McDaniel said, "We know there has been a loss of confidence in our industry." Probably, the cow had something to do with this.

S&P President Deven Sharma, a master of understatement, acknowledged, "We recognize that many of the forecasts we used have not . . . borne out."

Thankfully, Sharma said, S&P has "reflected on the significance of this." Sharma said in internal investigation at S&P has shown the agency has not compromised itself to win business.

Now it's Waxman's turn. Expect him to light into that internal investigation.

-- Frank Ahrens