Standard & Poor's Civil Lawsuit Press Conference

Attorney General Eric Holder announces the Department of Justice's civil lawsuit against the credit rating agency Standard & Poor's Ratings Services. "Today's action is an important step forward in our ongoing efforts to investigate - and - punish the conduct that is believed to have contributed to the worst economic crisis in recent history. It is just the latest example of the critical work that the President's Financial Fraud Enforcement Task Force is making possible."

Attorney General Eric Holder discusses the Department of Justice's civil lawsuit against the credit rating agency Standard & Poor's Ratings Services. The lawsuit alleges that investors, many of them federally insured financial institutions, lost billions of dollars on CDOs for which S&P issued inflated ratings that misrepresented the securities' true credit risks.

Attorney General Eric Holder addresses members of the media regarding the Department of Justice's civil lawsuit against the credit rating agency Standard & Poor's Ratings Services. "Put simply, this alleged conduct is egregious - and it goes to the very heart of the recent financial crisis."

Acting Associate Attorney General Tony West remarks that "revenues and profits" drove S&P's alleged conduct. "Many investors, financial analysts and the general public expected S&P to be a fair and impartial umpire in issuing credit ratings, but the evidence we have uncovered tells a different story."

Principal Deputy Assistant Attorney General for the Civil Division Stuart F. Delery discusses the civil suit brought by the Department. "As today's filing demonstrates, the Department of Justice is committed to using every available legal tool to bring to justice those responsible for the financial crisis."

U.S. Attorney for the Central District of California Andre´ Birotte Jr notes the "significant harm" S&P's alleged actions caused his district. "Across the seven counties in my district, we had huge numbers of homeowners who took out subprime mortgage loans, many of which were made by some of the country's most aggressive lenders only because they later could be securitized into debt instruments that were given flawed 'AAA' ratings by S&P. This led to an untold number of foreclosures in my district."

Connecticut Attorney General George Jepsen talks explains his state's decision to join the lawsuit. The underlying federal investigation, code-named "Alchemy," that led to the filing of this complaint was initiated in November 2009 in connection with the President's Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys' offices and state and local partners, it's the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.

California Attorney General Kamala Harris acknowledges state-federal collaboration in the lawsuit against S&P. Today's action was filed in the Central District of California, home to the now defunct Western Federal Corporate Credit Union (WesCorp), which was the largest corporate credit union in the country. Following the 2008 financial crisis, WesCorp collapsed after suffering massive losses on RMBS and CDOs rated by S&P.

Delaware Attorney General Beau Biden addresses the media regarding his state's decision to take part in the Department of Justice lawsuit against S&P. The complaint also alleges that S&P falsely represented that its ratings were objective, independent, and uninfluenced by S&P's relationships with investment banks when, in actuality, S&P's desire for increased revenue and market share led it to favor the interests of these banks over investors.

Mississippi Attorney General James Hood discusses his state's role in the Federal lawsuit against S&P for alleged financial fraud. The complaint, which names McGraw-Hill Companies, Inc. and its subsidiary, Standard & Poor's Financial Services LLC (collectively S&P) as defendants, seeks civil penalties under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).

Illinois Attorney General Lisa Madigan talks about federal-state cooperation in formulating the lawsuit. Also joining the Department of Justice in making this announcement were the attorneys general from California, Connecticut, Delaware, the District of Columbia, Illinois, Iowa and Mississippi, who have filed or will file civil fraud lawsuits against S&P alleging similar misconduct in the rating of structured financial products. Additional state attorneys general are expected to make similar filings today.

Iowa Attorney General Tom Miller recognizes the efforts put forth by the Department of Justice and by other states in bringing the complaint against S&P. FIRREA authorizes the Attorney General to seek civil penalties up to the amount of the losses suffered as a result of the alleged violations. To date, the government has identified more than $5 billion in losses suffered by federally insured financial institutions in connection with the failure of CDOs rated by S&P from March to October 2007.