New York top prosecutor Eric Schneiderman went after Standard & Poors ratings agency this week. He also submitted inquiries for information from Fitch Ratings and Moody’s Investors Service.
But there’s a catch. Apparently, Scneiderman’s predecessor made agreements with firms in 2008 that could prohibit him from pursuing legal action.
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Late Monday, the US Justice Department sued Standard & Poors for $5 billion in losses incurred by federally backed banks and credit unions that relied on S&P’s high ratings for mortgage-backed securities that later went bad.
Thirteen attorneys general filed suit against S&P this week. The claim is that S&P said its ratings were independent but instead, they allegedly were biased in favor of banking clients.
It is unclear why S&P was subpoenaed by the New York attorney general’s office but that other ratings agencies only received requests for information.
Moody’s has also been sued by several states. Both it and S&P are set to face a jury trial in May over a suit filed by institutional investors over ratings issued in advance of a crisis.
All three ratings agency firms have said they will fight the suits vigorously.
The SEC has a continuing investigation going on into S&P; the SEC and the Justice Department have continuing probes
The ratings firms’ conduct since the crisis could also factor into the investigations.