M-REITs, or mortgage REITs, primarily invest in real estate loans and mortgage-backed securities that are often below investment grade. When a mortgage REIT decided some years ago to re-securitize a substantial portion of its CMBS "BB" and "B" securities, it received surprisingly high investment grade ratings of "A" and "BBB" from Standard & Poor's on the new securities that were created from the cash flows of the underlying portfolio of non-investment grade rated securities. But when the financial markets began to fall a few months later, that mortgage REIT quickly went bankrupt and the value of its "A" and "BBB" investment grade rated re-securities fell substantially. The intended purpose of the ratings agencies is: To produce substantial profits for the rating agencies from the fees paid to them for giving higher ratings on investments than might otherwise be appropriate To help businesses and governments raise needed capital by providing them with the ratings they need to successfully sell their equity and debt securities To give investors an objective assessment of the level of risk of the rated securities To ensure that the public does not lose money on their rated investments

M-REITs, or mortgage REITs, primarily invest in real estate loans and mortgage-backed securities that are often below investment grade. When a mortgage REIT decided some years ago to re-securitize a substantial portion of its CMBS "BB" and "B" securities, it received surprisingly high investment grade ratings of "A" and "BBB" from Standard & Poor's on the new securities that were created from the cash flows of the underlying portfolio of non-investment grade rated securities. But when the financial markets began to fall a few months later, that mortgage REIT quickly went bankrupt and the value of its "A" and "BBB" investment grade rated re-securities fell substantially. The intended purpose of the ratings agencies is: To produce substantial profits for the rating agencies from the fees paid to them for giving higher ratings on investments than might otherwise be appropriate To help businesses and governments raise needed capital by providing them with the ratings they need to successfully sell their equity and debt securities To give investors an objective assessment of the level of risk of the rated securities To ensure that the public does not lose money on their rated investments