Fianlly, someone is getting a little slap on the hand for inflating ratings on mortgage investments to boost their profit. The U.S. Government is taking on the key player who was responsible with the real estate bubble as well as our current financial crisis.
Charges were filed on Monday in a Los Angeles federal court. The Justice Department has issued that Standard & Poor’s gave high marks to mortgage-backed securities that later went sour, even though they knew they were bad. They misrepresented the risks because they wanted more business from the banks.
There is a built in conflict of interest because they are paid by those they are providing ratings for. Talk about a scam! Dodd Frank didn’t help the issue, but the SEC is no overseeing the credit rating companies like S&P.
“Put simply, this alleged conduct is egregious — and it goes to the very heart of the recent financial crisis,” Attorney General Eric Holder told a news conference Tuesday. He called the case “an important step forward in our ongoing efforts to investigate and punish the conduct that is believed to have contributed to the worst economic crisis in recent history.”
FINALLY!!!! 16 states have followed suit and hopefully more will file lawsuits against the S&P.
S&P blames the government for failing to predict the subprime mortgage crisis.
The government’s lawsuit states that “S&P’s desire for increased revenue and market share … led S&P to downplay and disregard the true extent of the credit risks” posed by the investments it was rating.
LETS SEND THEM ALL TO JAIL!
The action unfortunately does not involve any criminal allegations… Since they would require a higher burden of proof, I guess the key players will still get off the hook with their billions in the bank.