NEW YORK ( TheStreet) - Prior to the financial crisis, ratings agencies such as Moody's Investors Service (MCO), McGraw-Hill (MHP)-owned Standard & Poor's and Fitch Ratings looked the other way when it came to giving risky subprime mortgage securities top grades.
As subprime markets revive from a post-crisis thaw, however, Fitch has decided to take a stand against the compulsion to rubber stamp risky bundles of subprime loans with high ratings.
The battleground it has chosen is auto loans. Auto loans represent the first major thaw in the subprime market, and may be early evidence of Wall Street activity that poses risks to the wider public.
Fitch is refusing to rate debt securities issued by subprime auto lender
Exeter Finance Corp., owned by private equity giant
(BX), amid concerns the firm doesn't have the track record or financial health to support a top rating.
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