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S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
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The U.S. Justice Department files a civil lawsuit accusing S&P and parent company McGraw Hill of giving improper ratings to poor mortgage investments which allowed them to inflate in value, creating the conditions for a crash in these investments when the crisis happened in 2008. The penalty sought by the Justice Department and the attorney generals for 16 states is $5 billion to cover losses to investors such as state pension funds and federally insured banks and credit unions. The civil suit comes 5 years after the onset of the financial crisis of 2008, which created the greatest financial crisis since the 1930's. Negotiations for a settlement were conducted by the Justice Department with McGraw Hill for an extended period of time. The talks broke down in January 2013. In these negotiations the Justice Department sought a penalty of over $1 billion and S&P's acceptance of wrongdoing. S&P countered with a proposed settlement of $100 million. The government pushed for admission of guilt on at least one count of fraud. It is not known why the Justice Department filed this lawsuit 5 years after the crisis when the public's memory of the ratings issue is beginning to fade. Is it because the preparation of the case required this much time, the action not taken because it would be seen as punitive in 2011 when S&P downgraded the U.S. sovereign credit rating, the fragility of the economy in 2011, because of the approaching election in 2012, or some other reason. One of the reasons why it was important to take corrective action early was to preserve the integrity and credibility of financial markets, so critical for public confidence. An additional reason was to secure from credit ratings companies the internal reforms and change in leadership and culture that would prevent recurrence and damage to the economy. An example of this change is the change in leadership and culture underway at Barclays bank in Britain after the investigation into the manipulation of the London Interbank Offered Rate or LIBOR. The Justice Department action in this respect is an advance from the policy at the S.E.C., which has not insisted that companies involved in the crisis admit wrongdoing, setting up the process for changes in leadership and culture such as the one at Barclays.
U.S. credit ratings agencies and legal settlements
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S&P's Account of An Irate Treasury Secretary
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The Stone Unturned: Credit Ratings
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S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
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Regulators Struggle With Conflicts in Credit Ratings and Audits
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S&P to Pay $1.5 Billion to Resolve Crisis-Era Litigation
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The S.E.C. and the Credit Ratings Agencies in the U.S. - 2010-2014
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The failure of the Securities and Exchange Commission to keep the intent of the Dodd-Frank law, and hold credit ratings agencies accountable for ratings they issue. This opens the door to the kinds of problems that caused the financial crisis of 2008.
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Rating Firms Steer Clear of an Overhaul
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Obama Presses Regulators to Finish Financial Rules
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S&P's Account of An Irate Treasury Secretary
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The Stone Unturned: Credit Ratings
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S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
New York Times 02/05/2013
Regulators Struggle With Conflicts in Credit Ratings and Audits
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The lack of meaningful reform of credit rating agencies.
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Rating Firms Steer Clear of an Overhaul
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A Warning Light to Alert the I.M.F.
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The Stone Unturned: Credit Ratings
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S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
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S.&P. Settlement Leaves Future Unclear for Ratings
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S&P
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Raters Fail to See Defaults Coming
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Wall Street Journal 12/09/2011
Wall Street Journal 02/05/2013
S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
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S&P ratings of mortgage debt and the Justice Department civil lawsuit
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S&P's Account of An Irate Treasury Secretary
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SEC Tells S&P It Could Face Enforcement Action
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Regulators Struggle With Conflicts in Credit Ratings and Audits
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S.&P. Nears Settlement With Justice Over Inflated Ratings
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S&P to Pay $1.5 Billion to Resolve Crisis-Era Litigation
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S.&P. Settlement Leaves Future Unclear for Ratings
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The EU and credit ratings agencies
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Rating Firms Steer Clear of an Overhaul
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The Stone Unturned: Credit Ratings
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S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
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What Crisis? Big Ratings Firms Stronger Than Ever
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Plans to Tighten Rules On Credit Firms Stalled
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Ratings Firms Misread Signs of Greek Woes
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2008 subprime mortgage securities financial crisis
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Financial crisis from the widespread distribution of securities created from pools of subprime mortgages in the portfolios of finacil institutions around the globe. How credit rating agencies helped create the crisis by giving A ratings to these securities which were then widely distributed as credit worthy.
Grouped Articles
BusinessWeek 04/01/2010
A Toxic Subprime Mortgage Bond's Legacy Lives On
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Recipes for Ruin, in the Gulf or on Wall Street
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S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
New York Times 02/05/2013
S&P to Pay $1.5 Billion to Resolve Crisis-Era Litigation
Wall Street Journal 02/04/2015
Wall Street Journal 02/27/2008
Credit rating agencies and the eurozone debt crisis
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The Stone Unturned: Credit Ratings
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S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
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Wall Street Journal 07/01/2011
S&P downgrades U.S. credit rating for first time - The Washington Post
Washington Post 08/06/2011
Economist 08/13/2011
At S&P, a Crusader for Tough Ratings
Wall Street Journal 10/05/2011
Credit Rating Officers at S&P
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S&P's Account of An Irate Treasury Secretary
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S&P Nears Settlement on Real-Estate Bond Ratings
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S.&P. Settlement Leaves Future Unclear for Ratings
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Wall Street Journal 12/09/2011
Credit-Rating Gadfly Leaves S&P
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Washington Post 02/05/2013
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McGraw Hill Financial Results Top Views on Rating Service Strength
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New S&P Chief Knows Crisis and Change
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Wall Street Journal 08/24/2011
At S&P, a Crusader for Tough Ratings
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S&P performance
08/11/2011
Grouped Articles
McGraw Hill Financial Results Top Views on Rating Service Strength
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S.&P. Nears Settlement With Justice Over Inflated Ratings
New York Times 01/12/2015
S.&P.'s $1.37 Billion Reckoning Over Crisis-Era Misdeeds
New York Times 02/03/2015
Wall Street Journal 08/11/2011
Raters Fail to See Defaults Coming
Wall Street Journal 08/12/2011
New S&P Chief Knows Crisis and Change
New York Times 08/24/2011
Setting the record straight and restoring the credibility of credit ratings- the U.S. Justice Department's struggle with S&P 2013-2015
02/05/2013
U.S. Associate Attorney General Dillery, the governments top negotiator in a $1.5 billion settlement in Jan 2015, says never has the Justice Department produced 290 million documents in discovery in Justice Department history.This is how many documents were produced in this case which he said showed S&P in serious breach of duty, which affected the U.S. financial system leading to many adverse consequences.
Linked Articles
S&P to Pay $1.5 Billion to Resolve Crisis-Era Litigation
Wall Street Journal 02/04/2015
S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
New York Times 02/05/2013
The slow process of reform for credit ratings agencies involved in the 2008 global financial crisis six years later in 2014
02/05/2013
Linked Articles
S. & P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor
New York Times 02/05/2013
The Stone Unturned: Credit Ratings
New York Times 03/22/2014
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