S&P close to historic settlement over its role in the financial crisis
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Version 0 of 1. Standard & Poor’s Rating Services is reportedly close to reaching a historic settlement with the US Justice Department and several states in a case claiming that S&P knowingly played a part in the 2008 financial crisis. The Wall Street Journal reported that the $1.37 billion deal could be struck as early as Thursday. If the settlement is reached, it would be the largest paid by a ratings agency over allegations of unfair bond grading leading up to the 2008 financial crisis, which was deepened by the bursting of the housing bubble. The lawsuits claim that S&P issued positive grades of residential mortgage bonds when the firm knew the grades were not accurate. In all, 20 states and Washington D.C. filed lawsuits against S&P. The US Financial Crisis Inquiry Commission, tasked with investigating the crisis, said that S&P and other credit ratings agencies were “key enablers of the financial meltdown.” S&P has not signed the settlement yet and it’s unclear exactly when it will be agreed, but sources close to the deal say it should not be longer than a week, the Journal reported.
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