NPR logo

Moody's Cuts Debt Ratings for Subprime Loans

  • Download
  • <iframe src="https://www.npr.org/player/embed/11867282/11867283" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Moody's Cuts Debt Ratings for Subprime Loans

Economy

Moody's Cuts Debt Ratings for Subprime Loans

Moody's Cuts Debt Ratings for Subprime Loans

  • Download
  • <iframe src="https://www.npr.org/player/embed/11867282/11867283" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Credit rating firm Standard & Poor's says it expects more delinquent and defaulted home loans. Moody's lowered ratings on more than $5 billion of subprime-related debt. The moves show that ratings firms were overly optimistic about the housing market, and slow to admit they were wrong.

JOHN YDSTIE, host:

NPR's business news starts with more hits to the mortgage industry.

Ratings agencies yesterday threatened to downgrade the credit on some $12 billion of bonds backed by subprime home loans. Investors saw it as a sign that the downturn in the nation's housing market is worsening. So stocks tumbled. First, the ratings firm Standard & Poor's announced it expects more delinquent and defaulted home loans. Hours later, Moody's, another rating firm, went even further. It lowered the ratings on more than $5 billion of subprime-related debt.

By keeping ratings high, credit agencies helped fuel the housing boom for people who may not have otherwise qualified for home loans. Yesterday's moves were a tacit admission that ratings firms were overly optimistic about the housing market and were slow to admit they were wrong.

Copyright © 2007 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.