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U.S. DOJ Lawsuit Against Standard & Poor's

On Tuesday, February 5, 2013, the U.S. Department of Justice (DOJ) filed a civil lawsuit against Standard & Poor’s, alleging that the credit rating agency’s ratings on mortgage-backed securities contributed to the financial crisis. The complaint alleges that S&P defrauded investors in residential mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs). The DOJ alleges that financial institution investors, including WesCorp FCU and Eastern Financial Florida CU, lost billions of dollars by purchasing these financial products, because S&P did not provide “objective, independent, and uninfluenced” ratings, and the credit rating agency favored its relationships with investment banks over financial institution investors.