Illinois Attorney General Lisa Madigan is filing a suit against Standard and Poors for assigning inappropriately high ratings to some of the highest risk mortgage backed securities in the years leading up to the financial crisis of 2008.
From the Sun-Times article by John Scalzitti on the suit -
The suit, filed Wednesday in Cook County Circuit Court, alleged that S&P “compromised its independence” by giving its highest ratings to “unworthy, risky investments as a corporate strategy to increase its revenue and market share,” the Attorney General’s office said Wednesday in a written announcement of the suit.
The suit alleges S&P “ignored the increasing risks posed by mortgage-backed securities” and instead assigned investment pools ratings that favorable to its client base and its own profits, the statement said.
The Tribune adds:
Illinois' complaint accused S&P of "systematically misrepresenting that its credit analysis of structured finance securities was objective, independent and not influenced by either S&P's or its clients' financial interests."
It quotes several internal S&P communications, including a widely quoted 2007 instant message by an analyst: "It could be structured by cows and we would rate it."
It's about time someone finally got after some of the root bad actors that helped to precipitate the crisis.
Ohio previously sued S&P, Moody's and Finch and lost, and Connecticut settled with the agencies this last October.
Madigan previously has won settlements from Countrywide and Wells Fargo for practices that (in my opinion) contributed to the crash.