Congress presses rating agencies on MF Global: report

Thu Jan 5, 2012 5:09am EST
 
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(Reuters) - Congressional investigators have stepped up their inquiry into the work of credit rating firms that examined MF Global's overly risky bets on European government bonds and whether they overlooked crucial information in their evaluations, the Wall Street Journal reported, citing people familiar with the matter.

The House Financial Services subcommittee's chairman, who is investigating the matter, sent letters to Moody's Corp chief executive Raymond McDaniel and Standard & Poor's Ratings Services president Douglas Peterson asking for detailed information about their procedures for determining MF Global's credit-worthiness, the Journal said.

The Journal said it reviewed the letter sent December 27 by Rep. Randy Neugebauer, a Republican congressman from Texas.

The House subcommittee has asked McDaniel and Peterson to testify in a new round of hearings on MF Global's demise, the Journal said, citing people familiar with the matter.

The hearings are expected to take place later this month or in early February, it said.

The rating agencies that had investment-grade ratings on MF Global played a key role in the events that led to the sudden downfall of MF Global. In late October the firms downgraded MF Global amid rising concerns about the European bet, thus triggering a bankruptcy filling.

Spokesmen for S&P and Moody's declined to comment to the Journal.

S&P and Moody's could not be reached for comment by Reuters outside of U.S. business hours.

(Reporting by Rachana Khanzode in Bangalore;)