The Five Dumbest Things on Wall Street This Week

3. Double Downgrade

Standard & Poor's has had a very poor week.

On Tuesday, the New York credit rating agency finally swung into action on the sinking market for subprime mortgages. The firm said it was reviewing some $12 billion worth of residential mortgage securities for a possible downgrade.

The timing raised eyebrows, since the market for subprime loans -- mortgages issued to homebuyers with poor credit histories -- blew up several months ago. Rising defaults and delinquencies took down dozens of small lenders and a few big ones. The biggest blow-up was New Century Financial (NEWCQ Quote - Cramer on NEWCQ - Stock Picks), which filed for Chapter 11 more than three months ago.

"Why now?" one fund manager asked on S&P's Tuesday morning conference call. "Delinquencies have been a disaster for many months. It couldn't be that you just woke up to it."

Don't put anything past S&P, though.

The firm quietly admitted Thursday that the ratings watch actually covers just $7 billion worth of securities -- not $12 billion as reported Tuesday.

The $5 billion miscalculation didn't exactly help S&P's cause with its Wall Street skeptics. The company had said Tuesday that it held off on reviewing the ratings because delinquency data needed more "seasoning."

But there's no sugar-coating it: S&P has been asleep at the switch.

Dumb-o-Meter score: 88. "It was an error and we corrected it," an S&P spokesman told Reuters on Thursday. "It was human error. It is what it is."

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