Bloomberg News

Evidence Shows S&P Inflated Bond Ratings, Holder Says

March 06, 2013

Evidence Shows S&P Knowingly Inflated Bond Ratings, Holder Says

A pedestrian passes in front of Standard & Poor's headquarters in New York. Photographer: Scott Eells/Bloomberg

The U.S. Justice Department has evidence to show that McGraw-Hill Cos. (MHP:US) unit Standard & Poor’s knowingly inflated its ratings of mortgage bonds before the 2008 financial crisis, said Attorney General Eric Holder.

The department “believes our evidence will show” the ratings company falsely represented that its ratings were objective and weren’t influenced by investment banks, Holder said today at a Senate Judiciary Committee hearing in Washington.

The Justice Department and state attorneys general on Feb. 4 sued S&P and its parent company for least $5 billion in damages on behalf of federally insured financial institutions. The company has called the claims meritless and said it will “vigorously” defend itself against the allegations.

Holder declined to discuss specifics of the case.

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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