S.&.P. Announces $1.37 Billion Settlement With Prosecutors

[ElNono]

Nearly a decade after credit ratings agencies became a symbol of a financial crisis they helped create, one of the industry’s biggest players faces a costly reckoning.

Standard & Poor’s, a ratings agency accused of inflating its assessment of mortgage investments that spurred the 2008 crisis, announced on Tuesday that it had agreed to pay $1.37 billion to settle civil charges from the Justice Department and from 19 state attorneys general and the District of Columbia.

The settlement, which does not require judicial approval, signals that the investigation of crisis-era misdeeds has entered a final stage.

...

But in a statement of facts with the settlement, the company acknowledged that “the voluminous discovery provided to S.&P. by the United States to date” does not “support its allegation” that the Justice Department acted out of spite. S.&P. agreed to withdraw that allegation.

That about-face was one of many compromises that ultimately paved the way to a settlement. Just as S.&P.’s retracting the claims of retaliation was a must-have for the Justice Department, S.&P. refused to admit to wrongdoing. Ultimately, the government conceded that fight.

...

S.&P.’s decision to fight the Justice Department’s case caught Wall Street and Washington by surprise. Nearly every financial ins ution that faces a Justice Department lawsuit eventually settles.

Such outcomes — $1 billion is now a floor, not a ceiling for a settlement — have led Wall Street lawyers to criticize what they call a government shakedown. And yet, some lawmakers complain that the civil lawsuits are a slap on the wrist for companies that helped ignite the worst financial crisis since the Great Depression. Not one top executive at S.&P., or any major Wall Street firm, was charged criminally for the misdeeds during the era.

http://dealbook.nytimes.com/2015/02/...osecutors/?hpw

[boutons_deux]

nothing has changed, the ratings agencies are still paid by the bond sellers to rate the bonds. Structural conflict of interest. Financial sector is still corrupt, fraudulent, thieving, as ever, bigger than ever.

[Winehole23]

Such outcomes — $1 billion is now a floor, not a ceiling for a settlement — have led Wall Street lawyers to criticize what they call a government shakedown. And yet, some lawmakers complain that the civil lawsuits are a slap on the wrist for companies that helped ignite the worst financial crisis since the Great Depression. Not one top executive at S.&P., or any major Wall Street firm, was charged criminally for the misdeeds during the era.


The Justice Department’s lawsuit argued that S.&P. had a conflict of interest, because the banks that created the mortgage investments paid S.&P. to rate the deals. It also accused S.&P. of falsely claiming that its ratings “were objective, independent, uninfluenced by any conflicts of interest.”


S.&P. argued that its claims of objectivity were “puffery” and could not be taken seriously. It called the Justice Department’s lawsuit “meritless.”

...but eventually backed away from the rhetorical precipice.

oh, well, at least S&P can say "there was no finding of criminal wrongdoing"

[Winehole23]

Exoneration!