Bernanke Warned of Risks From Flawed Credit Ratings

Senior Federal Reserve officials including Chairman Ben S. Bernanke warned in August 2007 that investor confidence in credit rating companies was fading, risking greater instability in financial markets.

“There is an information fog” that “is very much associated with the loss of confidence in the credit-rating agencies,” Bernanke said at a meeting on Aug. 7, 2007. The firms’ “credibility has been shot” and “it is much harder to see that this market will unwind itself in a rather kind and comforting environment,” said Kevin Warsh, then a Fed governor.