A federal judge has given Standard & Poor's a weapon in its fight against a $5 billion DOJ lawsuit
A federal judge has given Standard & Poor's a weapon in its fight against a $5 billion Justice Department lawsuit.
The Justice Department is suing the ratings agency for giving inflated ratings to mortgage bonds it knew to be subpar. S&P, meanwhile, contends the government is suing merely in retaliation for the agency's 2011 downgrade of the United States credit rating.
US District Judge David Carter has ruled that the Justice Department must provide documents relevant to S&P's claim, according to a Businessweek report. Carter ruled that S&P had the right to know whether the Obama administration's anger at the downgrade played a role in the lawsuit. He cited a 2011 phone call allegedly placed by then-Treasury Secretary Tim Geithner to Harold McGraw III, CEO of S&P's parent company. McGraw swore in an affidavit that Geithner criticized the downgrade as unpatriotic, Businessweek reported.
The government denies the downgrade had any role in its decision to sue. It asserts that S&P knowingly inflated bond ratings for its biggest banking clients in order to curry favor.
S&P isn’t only in trouble with the feds. Several states are suing the ratings company on similar grounds. S&P has categorically denied any wrongdoing, calling all of the lawsuits “meritless.”
“The claims are simply not true and we will vigorously defend S&P against them,” the company said in a statement.
The Justice Department is suing the ratings agency for giving inflated ratings to mortgage bonds it knew to be subpar. S&P, meanwhile, contends the government is suing merely in retaliation for the agency's 2011 downgrade of the United States credit rating.
US District Judge David Carter has ruled that the Justice Department must provide documents relevant to S&P's claim, according to a Businessweek report. Carter ruled that S&P had the right to know whether the Obama administration's anger at the downgrade played a role in the lawsuit. He cited a 2011 phone call allegedly placed by then-Treasury Secretary Tim Geithner to Harold McGraw III, CEO of S&P's parent company. McGraw swore in an affidavit that Geithner criticized the downgrade as unpatriotic, Businessweek reported.
The government denies the downgrade had any role in its decision to sue. It asserts that S&P knowingly inflated bond ratings for its biggest banking clients in order to curry favor.
S&P isn’t only in trouble with the feds. Several states are suing the ratings company on similar grounds. S&P has categorically denied any wrongdoing, calling all of the lawsuits “meritless.”
“The claims are simply not true and we will vigorously defend S&P against them,” the company said in a statement.
