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SputnikNews reports
Moody's Corporation will pay $864 million to settle federal and state claims that it gave misleading ratings to risky mortgage investments, leading to the subprime mortgage crisis in the US and to the Great Recession.
In the deal, announced January 13, the ratings agency will give $437.5 million to the Justice Department and $426.3 million to be divided among the 21 involved states and the District of Columbia.
The settlement does not come close to the hardship caused by the global crisis theirs and other ratings set into motion, of course. The US Financial Crisis Inquiry Commission found in 2011 that the 2008 mortgage crisis wiped out $11 trillion of American household wealth, Bloomberg notes.
"We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction," the conclusions in its final report read. [PDF]
[...] This crisis could not have happened without [Moody's, Fitch, and Standard and Poor's]. Their ratings helped the market soar and their downgrades through 2007 and 2008 wreaked havoc across markets and firms.
Standard and Poor agreed to pay nearly $1.4 billion two years ago to settle similar allegations by the Justice Department, 19 states and the District of Columbia, Yahoo News reports. Moody's settled before a federal lawsuit was filed; Standard and Poor settled only after the US filed a $5 billion suit against them for fraud, Reuters points out.
(Score: 0) by Anonymous Coward on Tuesday January 17 2017, @02:38PM
Don't worry. Moody's contract enforcement agency will take care of it.
Hmm, as much as Ancap is growing on me (Ancap is not the end all be all of libertarianism), that does explain the piddly fine here. Of course you're going to use a contract enforcement agency that's only going to give you a slap on the wrist (which you just include as a cost of having that contract enforcement agency on the accounting side) to keep up appearances. And no wonder that all the too big to fail banks just happen to be using the same contract enforcer that's hardly better than just not having one. That contact enforcer would be the US government.
While I'm still not convinced that Ancap can work in the real world, it would be nice to be able to stop doing business with this particular shitty, biased, bought-and-paid-for (perhaps I'm begging the question) contract enforcer.