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Ex-S&P director: There was a 'disconnect'

WASHINGTON — A former executive for a credit rating agency is preparing to tell a Senate panel that poor internal communication contributed to his industry’s failure to flag risky investments ahead of the financial crisis.

Former Standard & Poor managing director Frank Raiter says in prepared testimony there was a “disconnect” between senior managers and the analytical managers responsible for assigning bond ratings. That, along with weak government regulation, led agencies into awarding high ratings to less-worthy investments.

Raiter is appearing before the Permanent Subcommittee on Investigations, which is examining credit rating agencies’ role in the financial crisis.

A committee report issued today says agencies were too influenced by banks.

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