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Tue Feb 5, 2013, 11:11 PM

What S&P's Role Was in the financial meltdown

A couple of days ago is was announced that the S&P financial rating service was being sued by the U.S. Department of Justice for $5 billion dollars. A very detailed explanation of what they did can be found here.

The short answer is that back in 2006 there was a real demand for more AAA securities. The S&P is alleged to rated some financial securities as AAA that weren't. This caused people to believe they were buying a safe investment when they weren't. Their defense is they used took the word of others that the rating system they used would work. However, the Justice Department is arguing there was a lack of due diligence. The company is being charged with bank and wire fraud but the Justice Department so far hasn't brought any criminal charges against anyone.

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Reply What S&P's Role Was in the financial meltdown (Original post)
toddmiller Feb 2013 OP
freshwest Feb 2013 #1
toddmiller Feb 2013 #2
freshwest Feb 2013 #3
toddmiller Feb 2013 #4

Response to toddmiller (Original post)

Tue Feb 5, 2013, 11:26 PM

1. I remember a little bit of this from back then. Fine lines being crossed. Huge profits.

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Response to freshwest (Reply #1)

Tue Feb 5, 2013, 11:30 PM

2. Should of added company lost 23% of value on news two days ago.

link to stockchart S&P is owned by McGraw Hill Cos

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Response to toddmiller (Reply #2)

Tue Feb 5, 2013, 11:31 PM

3. Didn't McGraw Hill get drawn into some other tussle a while back? I remember being surprised.

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Response to toddmiller (Original post)

Wed Feb 6, 2013, 06:42 AM

4. Man your good

New York was the first to sue them back in 2009.

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