Stock specialists watch news of the the Standard & Poor’s Ratings Services on the floor of the New York Stock Exchange on Tuesday. The U.S. government has filed civil charges against Standard & Poor’s Ratings Services for improperly giving high ratings to toxic mortgage bonds before the financial crisis.WASHINGTON – The Obama administration on Tuesday accused Standard & Poor’s of refusing to warn investors that the housing market was collapsing in 2006 because it would be bad for business.
The civil charges against the credit rating agency were the administration’s most aggressive action to date against those deemed responsible for contributing to the worst financial crisis since the Great Depression. They followed years of criticism that the government had failed to do enough.
The Justice Department accused S&P of knowingly inflating its ratings of risky mortgage investments that helped trigger the crisis. It’s demanding $5 billion in penalties.
According to the lawsuit, S&P gave high marks to the investments because it wanted to earn more business from the banks that issued them.
“This alleged conduct is egregious – and it goes to the very heart of the recent financial crisis,” Attorney General Eric Holder said at a news conference.