NEW YORK — Billionaire investor Warren Buffett on Wednesday defended credit rating agencies that gave overly positive grades to mortgage-related investments before the housing bust. He said the agencies were among many who missed warning signs of the crisis.
"They made the wrong call," acknowledged Buffett, who said he counted himself among those who failed to foresee the collapse of the housing bubble. Buffett called it the "greatest bubble" he had ever seen.
He testified before the federal Financial Crisis Inquiry Commission alongside rating company Moody's CEO Raymond McDaniel. The FCIC is a bipartisan group created by Congress to examine a range of issues surrounding the financial crisis.
Rating agencies have been criticized for giving high ratings to complex investments backed by risky mortgages. When homeowners defaulted, the agencies downgraded billions of dollars of investments at once. That helped spark the financial crisis.
Lawmakers have accused the industry of having a conflict of interest because the agencies are paid by the banks whose investments they rate. Congress is considering new rules for the industry as part of the broader financial regulatory overhaul.