http://www.washingtonpost.com/business/economy/justice-prepares-to-file-civil-lawsuit-against-sandp-over-alleged-misgrading/2013/02/04/e3605b5e-6eff-11e2-ac36-3d8d9dcaa2e2_story.html
The Justice Department is preparing to file a civil lawsuit against the ratings agency Standard & Poor’s that will allege the company gave its seal of approval to toxic investments at the heart of the financial crisis, according to the company and people briefed on the case.
The lawsuit would mark the government’s first federal case against one of the country’s big ratings firms, which have been blamed for playing a major role in causing the meltdown on Wall Street. The Justice Department has faced years of criticism from watchdog groups and some on Capitol Hill who have questioned why it has been slow to pursue those responsible for the crisis.
The department has told S&P it intends to focus on the firm’s grading of certain mortgage bonds from 2007, according to the company.
These ratings have drawn scrutiny because agencies issued top grades to securities tied to shoddy residential mortgages, making them appear safe for investors. When the housing bubble burst and homeowners began defaulting on their loans, these financial products became worthless. The resulting losses on Wall Street nearly took down the entire financial system.
= new reply since forum marked as read
