Mortgage Miscue

The Justice Department is investigating S&P's ratings on pre-credit crisis mortgage bonds.  Mortgage bonds that were rated AAA and that ended up in default played a large role in the credit crisis.  Here is a key paragraph from a New York Times article on the investigation:

In the mortgage inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers, according to the people with knowledge of the interviews. If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns.

That's a pretty serious allegation.  After S&P lowered the United States' credit rating I heard a guest on a BBC news cast that 97% of all pre-credit crisis mortgage bonds S&P rated AAA defaulted.  I don't know whether this statistic is true, but it's even half accurate, it is a staggering figure.