[Infowarrior] - McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings

[Richard Forno]

Good riddance.  Sue 'em all, and while the USG is at it, why not change the federal laws that *require* certain entities like pension funds to use these for-profit "ratings" agencies analysis in determining what they can and cannot buy on behalf of their individual investors.  This "ratings" scam (and it is a scam) has gone on for too long.  --rick


McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings

By Edvard Pettersson - Feb 5, 2013

McGraw-Hill Cos. (MHP) and its Standard & Poor’s unit were sued by the U.S. over claims S&P knowingly understated the credit risks of bonds and derivatives that were central to the worst financial crisis since the Great Depression.

The U.S. Justice Department filed a complaint yesterday in in Los Angeles, accusing McGraw-Hill and S&P of three types of fraud, the first federal case against a ratings company for grades related to the credit crisis. McGraw-Hill tumbled the most in 25 years yesterday when it said it expected the lawsuit.

S&P issued credit ratings on more than $2.8 trillion of residential mortgage-backed securities and about $1.2 trillion of collateralized-debt obligations from September 2004 through October 2007, according to the complaint. S&P downplayed the risks on portions of the securities to gain more business from the investment banks that issued them, the U.S. said.

“It’s going to be a tricky time for rating agencies,” Fred Ponzo, a capital markets analyst at Greyspark Partners in London, said in a telephone interview. “S&P is probably just the first to face the music.”

< - >

http://www.bloomberg.com/news/print/2013-02-05/u-s-files-lawsuit-against-mcgraw-hill-standard-poor-s.html

---
Just because i'm near the punchbowl doesn't mean I'm also drinking from it.