Blumenthal Sues Rating Agencies Over Subprime (VIDEO)
Bloomberg Video: Connecticut Attorney General Richard Blumenthal -- March 10
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March 10 (Bloomberg) -- Connecticut Attorney General Richard Blumenthal said he is suing Moody’s Corp. and Standard & Poor’s because they were “catering to the investment banks and other issuers” of structured debt securities.
“The rating agencies said they were objective and independent, knowing that they were heavily influenced by their bank clients,” Blumenthal said in a Bloomberg Television interview today.
The suits, which Blumenthal’s office said were served and not filed today, joins a claim filed by Ohio Attorney General Richard Cordray in November. Ohio sued Moody’s, S&P and Fitch Ratings on behalf of five Ohio public employee retirement funds, claiming improper ratings of mortgage-backed securities cost the funds more than $457 million.
Blumenthal told Bloomberg Television in November that he was considering suing the credit rating companies.
“We want money back for our taxpayers as a consequence of these misratings,” Blumenthal said in the November interview. “They gave AAAs to financial instruments that deserved much, much less. They were the enablers to this structured finance debacle.”
Blumenthal sued the credit-rating companies in 2008, saying they unfairly gave municipal bonds lower ratings than comparable corporate or structured debt.
“We believe the claim has no legal or factual merit and we intend to vigorously defend ourselves against it,” said Steven H. Weiss, a spokesman for S&P’s parent company McGraw-Hill Cos.
Moody’s ‘Will Prevail’
“The state attorney general’s suit is without merit, and we are confident that we will prevail once we have an opportunity to present the facts of the case,” a Moody’s spokesman, Michael Adler, said.
In separate complaints, Blumenthal claimed that Moody’s and S&P violated the state’s unfair trade practices law by falsely telling investors that the ratings given to structured-finance securities were objective and independent.
Instead, the two companies purposely assigned ratings that understated the credit risk of the securities to try to get more business and a bigger share of the structured-finance rating market, according to the complaints, which were provided by the attorney general’s office.
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(Screenshot...video is above)
Mar 11, 2010 at 2:12 PM
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Connecticut Sues Moody’s, S&P Over Subprime Ratings