Ratings agency S&P faces legal action over role in crisis
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Monday 04 February 2013
Standard & Poor's could face civil charges over the way it rated mortgage bonds before the financial crisis of 2008, when souring home loans triggered stresses that eventually plunged the global economy in to recession.
The three big ratings agencies – S&P, Moody's and Fitch – have been criticised for failing to recognise the subprime housing bubble by giving top-notch ratings to mortgage securities that turned sour with as the toll of bad debts rose in late 2007 and 2008.
The US Justice Department, along with state prosecutors, is preparing to file civil charges against S&P over its ratings of mortgage bonds, according to The Wall Street Journal, which said the move comes after the breakdown of settlement talks between the firm and government lawyers.
It is unclear what the charges will be, or what allegations will be made. Nor is it clear why prosecutors are focusing on S&P and not Moody's or Fitch.
Yesterday the US Justice Department and S&P did not immediately respond to a request for comment.
If charges are filed, the move would be the first such action by federal prosecutors against a ratings agency in relation to the crash. Two years ago, a US commission examining the causes of the crisis concluded that the "failures of credit rating agencies were essential cogs in the wheel of financial destruction".
- 1 Rihanna 'nude pictures' claims emerge on 4Chan as hacking scandal continues
- 2 Cyclist in Russia narrowly misses being hit by car and lorry
- 3 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 4 What are your fingerprint words?
Rihanna 'nude pictures' claims emerge on 4Chan as hacking scandal continues
Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
Jennifer Lawrence: Leaked 4Chan sex video branded 'fake' by users
Jennifer Lawrence 'naked sex video' will be leaked next, threatens 4Chan celebrity photo hacker
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...