On the heels of a federal lawsuit against Standard & Poor’s Ratings Services, Massachusetts Attorney General Martha Coakley said Tuesday that her staff also is looking into allegations the New York credit rating agency helped fuel the country’s mortgage meltdown and financial crisis.
On Monday, the US Department of Justice filed a civil suit against Standard & Poor’s, claiming the firm “engaged in a scheme to defraud investors” through inflated ratings of mortgage products that later turned out to be bad.
Coakley said her office is carrying out a “related investigation” and is “closely monitoring” the civil suit filed by the Department of Justice and other state attorneys general.
“These are serious allegations and, as our previous action around mortgage-backed securities has shown, our office remains committed to holding accountable those who helped trigger the financial crisis and to preventing further harm,” she said.
Coakley’s office would not provide any more information, but the federal justice department alleges investors lost billions of dollars on mortgage-related securities whose financial risks were misrepresented by the S&P, which favored “banks over investors” because it benefitted financially from those lenders.
Standard & Poor’s officials said the suit is without merit.