Blame the ratings agencies for the subprime crisis, The Wall Street Journal reports. In 2000, for instance, Standard & Poor’s said that “piggyback” mortgages, whereby borrowers take out a second loan to pay the down payment, were as safe for lenders as standard mortgages, and this led to a boom in subprime mortgages. S&P, Moody’s and Fitch Ratings all gave high marks to securities based on these loans.

Although S&P reversed its decision on the likelihood of such loans to default in 2006, the $1.1 trillion subprime mortgage market is in a mess today.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.