Bloomberg News

New York Attorney General to Reveal Mortgage Probe Development

June 04, 2008

New York Attorney General Andrew Cuomo said he would announce tomorrow ``a major development in his ongoing investigation of the mortgage loan industry.''

Moody's Corp. (MCO:US) and McGraw-Hill Cos. rose in stock trading today on news of an agreement with Cuomo that would let the credit-rating companies avoid sanctions over their alleged role in the subprime-mortgage crisis.

Moody's Investors Service, McGraw-Hill's Standard & Poor's unit and Fitch Ratings won't have to admit wrongdoing and will have six months to implement policies such as a new fee structure and increased disclosure about the deals they rate, according to people with knowledge of the accord. Moody's rose 3.1 percent in New York Stock Exchange trading. McGraw-Hill climbed 6.5 percent.

The firms were criticized for granting high ratings to subprime-mortgage securities that sank in value.

Benjamin Lawsky, Cuomo's special assistant, didn't respond to an e-mail seeking comment. Yesterday, he declined to comment on the matter. The announcement is scheduled for 11:30 a.m. tomorrow at Cuomo's offices in Manhattan.

The accord is part of a larger probe by Cuomo of the mortgage industry that caused more than $386 billion in credit losses and asset writedowns at banks.

To contact the reporter on this story: Karen Freifeld in New York state Supreme Court at kfreifeld@bloomberg.net.

To contact the editors responsible for this story: Patrick Oster at poster@bloomberg.net.


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Companies Mentioned

  • MCO
    (Moody's Corp)
    • $92.48 USD
    • 0.87
    • 0.94%
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