If the U.S. government gets its way a number of big fat chickens will soon come home to roost at S&P’s credit rating agency -- now facing civil action for its allegedly “fraudulent” role in the 2008 financial crisis.
If the U.S. government gets its way a number of big fat chickens will soon come home to roost at S&P’s credit rating agency -- now facing civil action for its allegedly “fraudulent” role in the 2008 financial crisis.
South of the border, federal officials filed a suit against the ratings service, charging that it inflated ratings for mortgage securities that were virtually worthless and would ultimately kick start a global recession that much of the world is still clawing its way back from.
The civil charges come courtesy of the U.S. Justice Department and were filed in a Los Angeles federal court. The expecatation is that several states will join the suit, seeking redress for the collapse of their housing markets.
S&P reacted to the news Monday, denying any wrongdoing and calling the lawsuit without merit.
The company deeply regrets that its ratings on some securities "failed to fully anticipate the rapidly deteriorating conditions in the U.S. mortgage market during that tumultuous time," writes S&P in statement Monday.
The action is already being viewed as a test case by industry watchers, suggesting other large ratings firms could also face the spectre of civil action for allegedly succumbing to the pressure of Wall Street investment banks and pressing their seal of approval to a complex house of card where risk-laden mortgage securities were passed off around the world as rock solid.
