Moody’s Reaches $864 Million Subprime Ratings Settlement
Bloomberg: Moody’s Corp. agreed to pay almost $864 million to resolve a multiyear U.S. investigation into credit ratings on subprime mortgage securities, helping to clear the way for the firm to move beyond its crisis-era litigation. Moody’s reached the agreement with the U.S. Justice Department and 21 states, which accused the company of inflating ratings on mortgage securities that were at the center of the 2008 financial crisis, the Justice Department said Friday in a statement. That penalty is about a third of the $2.5 billion that Moody’s earned in the four years leading up to the crisis. Standard and Poor’s, after fighting the U.S. in court for two years, settled similar claims with the U.S. for $1.5 billion last year. While Moody’s failed to abide by its own standards in rating some securities according to the government, it said the settlement doesn’t contain a finding it violated the law or any admission of liability.