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

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.

LAWSUIT: Read it (PDF)

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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