It's been nearly two years since a Senate Subcommittee studying the financial crisis released a report, suggesting the nation's major credit rating agencies — including Standard & Poor's and Moody's Investors Service — were partly to blame for the 2008 financial crisis.
Back in 2011, the Senate Permanent Subcommittee on Investigations reported that "inaccurate triple-A credit ratings" introduced key risk into the financial system and then contributed to the financial meltdown when the ratings giants underwent massive downgrades of the same mortgage-backed securities just months before the financial crisis.
The 2011 Senate Subcommittee report said the massive downgrades made by the credit ratings agencies a few months before the financial meltdown "precipitated the collapse of the residential mortgage backed-securities and CDO secondary markets" since the changes were "unprecedented in number and scope." The report added that "more than any other single event (the downgrades) triggered the beginning of the financial crisis."
If the Wall Street Journal's latest article alleging the Justice Department and state prosecutors are about to file civil charges against S&P over mortgage bond ratings, then it seems the Senate Subcommittee's findings are coming back to life, albeit two years after the Congressional investigators first released those findings. CNBC elaborated on the WSJ report, alleging the lawsuit involves 30 triple-A rated CDOs.
S&P was not available to immediately comment Monday afternoon. But early on, the credit rating agency pushed back against the 2011 report placing blame on the credit rating agencies.
"As we have said many times, we have been disappointed by the performance of our ratings on certain mortgage-related securities," S&P said back in 2011.
"The actions we took to downgrade U.S. RMBS and CDOs in 2007 and 2008 reflected the unprecedented deterioration in credit quality, but were not a cause of it. We regret that, like many others, we did not foresee the speed and extent of the housing downturn."
What's most interesting about the potential civil charges is that it has been nearly two years since the report came out of the Senate, placing blame on investment banks, rating agencies and other parties tied to mortgage bond issues.
The question is what else in the report will eventually resurface as potential civil charges or parties to a massive settlement? And why just S&P? If Moody's was named in the original Senate report, will additional ratings giants find themselves named in suits filed by the government?
It seems the further we get from the financial crisis, the more we hear about the alleged transgressions of yesterday.