U.S. Senate Banking Committee Chairman Christopher Dodd said he'll call credit-rating companies to Capitol Hill this fall to explain why they gave high ratings to subprime-mortgage securities that have plummeted in value.
The companies did "great damage" because of their ratings, Dodd, a Connecticut Democrat seeking his party's presidential nomination, said today in an interview with Bloomberg Television in Iowa City, Iowa. "They've got a lot of explaining to do in my view on why they were giving AAA ratings to securities that never deserved them," Dodd said.
Moody's Investors Service, Standard & Poor's and Fitch Ratings, the biggest credit-rating companies, have come under increased scrutiny because their ratings on bonds backed by mortgages held by people with poor or limited credit don't reflect the fastest default rate in a decade.
The Senate Banking Committee has already held a series of hearings to examine lending practices that he and federal regulators say contributed to rising numbers of subprime mortgage foreclosures. Dodd has chided the Federal Reserve and other bank regulators for not doing enough to protect consumers and has pressured them to write new rules restricting deceptive practices.