S&P faces US government lawsuit over mortgage bond ratings
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NEW YORK (AFP) - The US Justice Department plans to sue Standard & Poor's over its rating of mortgage bonds prior to the 2008 financial crisis, S&P said on Monday.
The suit, according to S&P, targets its ratings in 2007 of certain collateralised debt obligations, packages of mortgages sold to investors that were at the centre of the the 2008 financial crisis sparked by the US housing collapse.
S&P promised a vigorous defence, saying the looming lawsuit would be "entirely without factual or legal merit." A Justice Department spokeswoman declined to comment, but media reports said the suit could be filed later this week.
The US complaint, as described by S&P, appears to allege that S&P's high ratings on CDOs played a major role in the crisis because of the confidence they engendered in investors.
