Jerry Brown (D)
SACRAMENTO, Calif. (Legal Newsline)--The California attorney general said Wednesday that he plans to investigate credit rating firms.
Attorney General Jerry Brown said he wants to know what role the unnamed firms played in the nation's financial crisis.
The Democrat and potential 2010 gubernatorial candidate alleged in a statement that the firms gave high credit ratings to "complicated" securities, making instruments look as safe as government bonds, even though many of the securities were backed by risky subprime mortgages.
"In rating these securities, these agencies worked behind the scenes with the same Wall Street firms that created them," Brown said in the statement. "For their work, the agencies earned billions of dollars in revenue, at a rate double what they earned for rating other financial products."
Brown's investigation, which he plans to announce at a press conference today, comes on the heels of U.S. District Judge Shira Scheindlin's ruling this month that a group of New York investors are able to sue over ratings opinions because they are not protected by free speech rights, as Moody's Investors Service Inc. and Standard & Poor's had argued.