WASHINGTON — The credit rating agencies knew as early as 2006 that top ratings assigned to mortgage-backed securities were flawed, but they failed to take action because of competitive pressures and fear of the impact on investment bank clients, a key lawmaker said Thursday.

Sen. Carl Levin, the chairman of the Senate Permanent Subcommittee on Investigations, told reporters that because they failed to reevaluate their ratings, Standard & Poor's Ratings Services, Moody's and Fitch Ratings underplayed the riskiness of thousands of toxic securities, a delay that later exacerbated the financial crisis, he said.

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