SANTA ANA, Calif. (AP) — A California judge will hear arguments Monday on whether a $5 billion civil fraud lawsuit against the credit ratings agency Standard & Poor's should be dismissed.

S&P, a unit of New York-based McGraw-Hill Cos., wants the suit filed by federal prosecutors earlier this year tossed, arguing other agencies issued identical ratings before one of the nation's worst financial crisis. It's unclear whether U. S. District Judge David Carter will make a ruling after the hearing.

"If the government's case appears to be a stretch, that is because it is," the agency's attorneys wrote in a 21-page filing seeking dismissal. "S&P's inability, together with the Federal Reserve, Treasury and other market participants, to predict the extent of the most catastrophic meltdown since the Great Depression reveals a lack of prescience but not fraud."

The Obama administration accused S&P of refusing to warn investors about the collapsing housing market in 2006 and inflating its ratings of risky mortgage investments. Prosecutors believe the agency gave high marks to the investments because it wanted more business from the banks that issued them.

High ratings from the three major credit rating agencies made it possible for banks to sell trillions in risky investments. Some investors can buy only securities that carry high credit ratings.

The lawsuit alleges S&P recognized home prices were sinking and borrowers were having a difficult time repaying loans. But those facts weren't reflected in the ratings the agency gave to complex real-estate investments known as mortgage-backed securities and collateralized debt obligations, prosecutors said.

The government said S&P didn't move quickly enough to issue a mass downgrade of subprime-backed securities.

The civil case, which seeks $5 billion in penalties, is the Obama administration's most aggressive action against those who were deemed responsible for the recession, following years of criticism that the government didn't do enough.

About News.net

Publishing Services International Limited (PSIL) is the publisher and operator of a worldwide network of online news sites dedicated to delivering fair, accurate and relevant reporting from a variety of the world’s most trusted sources – from the biggest cities to the smallest towns.

We deliver positive and powerful messages to our readers, providing up‑to‑the‑second news that matters to the individual.

Our promise is to serve communities and individuals worldwide, delivering information that hasn’t always been available to them. We will give them back a voice – a voice that’s empowering because it is theirs – and provide a platform to communicate between themselves and the world.

We believe people are not just generic demographics; they are individuals with their own preferences and curiosities. We are about understanding these individuals, listening to them, and serving them.

We are the new pioneering spirit of news – we’re not talking to everyone, we’re talking with every one.

If you want your news, your voice, your way, on your time – we’ve got news for you.

 

FAQs

Email

If you have any questions or concerns please email us on support@news.net

Phone

  • Australia, Toll Free 1-800-983-421
  • Hong Kong, Toll Free 800-906-187
  • Singapore, Toll Free 800-852-3871
  • USA/Canada, Toll Free 1-800-830-4132

Advertise With Us

Interested in being awesome?
Contact us by email or phone.

Cancel