The federal government has lodged a civil complaint against Standard & Poor’s, alleging the ratings agency of driving the mortgage crisis by giving high marks to risky bonds.
This is the first action related to the housing crisis taken by the government against a major ratings agency, the Associated Press reported.
S&P said that it didn’t do anything wrong — and that the government itself failed to predict the housing-market collapse. The government’s suit, however, says S&P knowingly and willfully enticed investors to mortgage bonds with shaky numbers, AP reports.
Another allegation in the suit: That S&P got sloppy with its ratings.
“Most rating committees took less than 15 minutes to complete,” the government’s lawsuit read, according to AP. “Numerous rating committees were conducted simultaneously in the same conference room,” and the general push was for S&P to keep financial firms happy, whatever the cost, AP reported.
The lawsuit was filed in U.S. District Court in Los Angeles, citing a law that requires banks to invest safely, AP reported.
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Cheryl Chumley is a continuous news writer for The Washington Times. Previously, she was part of the start-up team for The Washington Times’ digital aggregation product, Times247. She’s also a 2008-2009 Robert Novak journalism fellow with The Phillips Foundation. She can be reached at cchumley@washingtontimes.com.
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