S&P to pay $1.37bn to resolve mortgage crisis lawsuits

GMT 15:08 2015 Tuesday ,03 February

Arab Today, arab today S&P to pay $1.37bn to resolve mortgage crisis lawsuits

New York - AFP

US rating firm Standard & Poor's said Tuesday it had agreed to pay $1.37 billion to settle lawsuits that it overrated mortgage bonds at the heart of the "subprime" housing crisis.
S&P said it had not admitted to any legal violations in the settlements, which resolve 2013 lawsuits filed by the US Department of Justice, 19 states and the District of Columbia.
Under a separate settlement with California pension fund CalPERS over mortgage deals, the company will pay $125 million.
S&P said it would pay $687.5 million to the Justice Department and $687.5 million to the states and Washington, DC.
The Justice Department accused the company of deliberately giving undeservedly rosy ratings to bonds between 2004 and 2007 that included some that were backed by subprime mortgages, risky loans that defaulted in droves as the housing price bubble collapsed.
The subprime crisis was at the center of the US financial meltdown in 2008 that led to the Great Recession that ended in mid-2009.
"The settlement agreement states that all parties, including the Company, the DOJ and the States, settled this matter 'to avoid the delay, uncertainty, inconvenience, and expense of further litigation,'" S&P said in a statement.
In January, S&P agreed to pay $77 million to settle allegations from three US regulators, including the Securities and Exchange Commission, that it had overvalued 2011 mortgage bonds.
As part of its penalty, S&P's  was stripped of its authority to rate certain bond deals for one year.

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