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posted by Fnord666 on Tuesday January 17 2017, @05:39AM   Printer-friendly
from the got-off-easy dept.

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.


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  • (Score: 0) by Anonymous Coward on Tuesday January 17 2017, @03:45PM

    by Anonymous Coward on Tuesday January 17 2017, @03:45PM (#454925)

    You are correct, provided that the business is appropriately punished.

    If there is no corrective action, then what you claim a Libertarian would state is then incorrect.

    Libertarians may have ideals, but there are plenty of realists. People with profit motives will not do the right thing to meet an ideal; they will gorge until they choke on their greed. Prior to that happening, they are going to keep feeding.