Lisa Madigan sues S&P over high ratings on risky mortgages

January 25, 2012

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(AP/File)

Illinois' attorney general is suing the credit ratings giant Standard and Poor's. Lisa Madigan said the company let profits drive the ratings it gave risky investments.

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Madigan alleges Standard & Poor's engaged in "unfair, deceptive and illegal business practice(s)" when it assigned credit ratings to those evil-doers of the economic collapse: residential mortgage backed securities and collateralized debt obligations.

The suits claims S&P "allowed its...desire for profits and fear of losing investment bank clients to taint the integrity of its supposedly independent credit analysis." As a result, Madigan said investors bought those products believing they were a safer bet than they really were.

The complaint was filed in Cook County court on Wednesday.

It quotes from internal S&P emails, including one in which an employee writes about the CDO market, "Let's hope we are all wealthy and retired by the time this house of cards falters."

A spokesman for S&P, David Wargen, said Wednesday afternoon, "The case is without merit and we will defend ourselves vigorously."

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