Wednesday, July 1, 2015

Obama's Justice Dept. (finally) goes after S&P for gold-plating junk loans

Credit rating agency Standard & Poor's, "knowingly and with the intent to defraud, devised, participated and executed a scheme to defraud investors," including FDIC-insured banks, that invested in residential-mortgage-backed securities and collateralized-debt obligations.

Obama's Justice Dept. (finally) goes after S&P for gold-plating junk loans

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Attorney General Eric Holder announces the formation of the Residential Mortgage-Backed Securities Working Group, Friday, Jan. 27, 2012, during a news conference at the Justice Department in Washington. President Barack Obama directed Holder to collaborate with several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. This working group will be operated out of the President´s Financial Fraud Enforcement Task Force, which is chaired by Holder. (AP Photo/Cliff Owen)
Attorney General Eric Holder announces the formation of the Residential Mortgage-Backed Securities Working Group, Friday, Jan. 27, 2012, during a news conference at the Justice Department in Washington. President Barack Obama directed Holder to collaborate with several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. This working group will be operated out of the President's Financial Fraud Enforcement Task Force, which is chaired by Holder. (AP Photo/Cliff Owen)

Credit rating agency Standard & Poor's, "knowingly and with the intent to defraud, devised, participated and executed a scheme to defraud investors," including FDIC-insured banks, that invested in residential-mortgage-backed securities and collateralized-debt obligations; "and to obtain money from these investors by means of material false and fraudulent pretenses, representations and promises, and the concealment of material facts," say U.S. Justice Department prosecutors, in this complaint, U.S. vs. McGraw Hill Cos. and Standard & Poor's, CV 13-00779, in the U.S. District Court in Los Angeles (Central District of California)

See also NYTimes story here, Bloomberg story here, Naked Capitalism's not-so-cynical leftish take here.

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PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

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Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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