MADIGAN SUES STANDARD & POOR’S FOR ENABLING FINANCIAL MELTDOWN - FORECLOSURE FRAUD

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MADIGAN SUES STANDARD & POOR’S FOR ENABLING FINANCIAL MELTDOWN

MADIGAN SUES STANDARD & POOR’S FOR ENABLING FINANCIAL MELTDOWN

Lawsuit: ‘Profits Were Running the Show’ at Leading Credit Ratings Agency

Illinois Attorney General-

Attorney General Lisa Madigan today filed a lawsuit against Standard & Poor’s for its fraudulent role in assigning its highest ratings to risky mortgage-backed investments in the years leading up to the housing market crash.

Madigan filed her lawsuit today in Cook County Circuit Court, alleging that Standard & Poor’s, or S&P, compromised its independence as a ratings agency by doling out high ratings to unworthy, risky investments as a corporate strategy to increase its revenue and market share. The Attorney General’s lawsuit alleges that S&P ignored the increasing risks posed by mortgage-backed securities, instead giving the investment pools ratings that were favorable to its investment bank client base and S&P’s profits.

“Publically, S&P took every opportunity to proclaim their analyses and ratings as independent, objective and free from its desire for revenue,” Madigan said. “Yet privately, S&P abandoned its principles and instead used every trick possible to give deals high ratings in order to retain clients and generate revenue. The mortgage-backed securities that helped our market soar – and ultimately crash – could not have been purchased by most investors without S&P’s seal of approval.”

The Attorney General’s lawsuit cites numerous internal emails and conversations among S&P employees in the run up to the housing market’s crash that demonstrate the company misrepresented its ratings as objective and independent. In one such exchange, in April 2007, an online conversation via a company-based instant messenger application revealed employees discussing S&P ratings compared to the reality of risk involved, with an employee stating an investment “could be structured by cows and we would rate it.”

[ILLINOIS ATTORNEY GENERAL]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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