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.