S&P to Pay Illinois $52.5M in Fed Mortgage Settlement
Standard & Poor's will pay $1.37B in a settlement pertaining to federal claims it knowingly inflated mortgage investment ratings and fed into the financial crisis. $52.5M of the sum will go to Illinois to restore losses on the investments of the state’s pension system, the Chicago Tribune reports.
Yesterday, during the Justice Department's announcement of S&P's settlement with the federal government, District of Columbia and 19 states, Attorney General Eric Holder said, "On more than one occasion, the company's leadership ignored senior analysts who warned that the company had given top ratings to financial products that were failing to perform as advertised."
The government alleged that S&P manipulated ratings of subprime mortgages between 2004 and 2007, and Illinois was one of the first states to sue in 2012 (later joining a Justice Department suit with other states in ’13).
The ratings agency's parent company, McGraw Hill Financial, noted that the settlement includes no evidence of explicitly illegal activity. This news follows a decision by financial firms to pay more than $40B to close federal and state investigations that have sought to hold banks and other companies accountable for the worst economic crisis since the Great Depression.