State Of Tennessee Sues Standard And Poor’s

Tuesday, February 5, 2013

Attorney General Bob Cooper on Tuesday joined the Department of Justice and other state Attorneys General in filing enforcement actions against Standard and Poor’s and its parent company, McGraw-Hill, seeking accountability for alleged misconduct by the credit rating agency.  The allegations involved structured finance securities backed by subprime mortgages that were at the heart of the nation’s financial crisis.

The federal and state complaints allege that despite S&P’s repeated statements emphasizing its independence and objectivity, S&P allowed its credit rating analysis to be influenced by its desire to earn lucrative fees from its investment bank clients.  Investors and others in the marketplace relied on credit rating agencies like S&P for accurate ratings because the underlying data for these securities was not publicly available.

This alleged misconduct began as early as 2001, became particularly acute between 2004 and 2007, and continued as recently as 2011.

Structured finance securities backed by subprime mortgages were at the center of the financial crisis.  These financial products, including residential mortgage-backed securities (RMBS) and collateral debt obligations (CDOs), derive their value from the monthly payments consumers make on their mortgages.

“The complaint filed in state court today alleges that investors as well as others in the market were misled by Standard and Poor’s promises that its analysis was independent and objective. Unfortunately, as the complaint alleges, this was not the case, and ratings of mortgage backed securities and collateral debt obligations were influenced by the desire to continue earning lucrative fees,” Attorney General Cooper said. 

Tennessee’s lawsuit seeks relief to stop S&P from making misrepresentations to the public; change the way the company does business; and civil penalties and disgorgement of ill-gotten profits.

The congressionally-appointed bipartisan Financial Crisis Inquiry Commission concluded in its final report that the financial crisis “could not have happened” without ratings agencies such as S&P.

The State’s Complaint may be found on the Attorney General’s website by going to www.tn.gov/attorneygeneral and clicking on “Filings of Interest.”

 


World's Largest One-Day Simulcast Leadership Conference Returns To Cleveland

Leadercast, the world’s largest one-day leadership conference, will be broadcast live from Atlanta and simulcast to hundreds of locations around the world on May 6. This year marks the 16th year of the annual leadership conference and the fourth year that the Cleveland/Bradley Chamber of Commerce and People for Care and Learning will host the event at First Baptist Church.   ... (click for more)

BEST/MATRR Officials Say "TVA Wastes Their Time And Our Money"

TVA Wastes Their Time and Our Money Bellefonte Efficiency and Sustainability Team/Mothers Against Tennessee River Radiation, a chapter of Blue Ridge Environmental Defense League, presented a report on Friday showing TVA’s "waste of money on nuclear power."   The group called for a withdrawal of the operating license for Bellefonte nuclear power plant in Hollywood, Ala.  ... (click for more)

Wintry Mix Possible For Chattanooga Area

A wintry mix is possible for the Chattanooga area beginning Sunday. However, there could be little or no snow and ice unless temperatures dip. Here is the latest forecast from the National Weather Service: MIXED WINTRY PRECIPITATION EXPECTED SUNDAY NIGHT AND MONDAY MORNING... A MIX OF RAIN AND SNOW IS EXPECTED TO BEGIN FALLING ACROSS THE SOUTHERN CUMBERLAND PLATEAU...THE ... (click for more)

Man At Homeless Camp On Chestnut Street Charged With Trying To Set Fire To Another Man

A man at a homeless camp on Chestnut Street has been charged with trying to set fire to another man at the camp. Richard Warren "Trey" Erwin, 40, is charged with aggravated arson. Police were called to the 2200 block of Chestnut at 12:40 a.m. Earlier, Michael Nye and Alisa Buckels had called for an ambulance. They were checked out at Erlanger Hospital for inhalation injuries. ... (click for more)

Black History Month Hero - Theodore McGraw (Kidd) AKA "Pongee" - And Response

I grew up in "Old St. Elmo" on 39th Street behind the Incline. As a child I remember my older brother "Pongee" as being my hero. This month of February being Black History Month, I cannot think of a better person to be honored than my late older brother, Theodore McGraw (Kidd) aka "Pongee" of St. Elmo (Gamble Town). Growing up without my father, Theodore was always available ... (click for more)

Roy Exum: Evaluators Earn $11.70

A number of curious job notices, under the heading of ‘General Labor,’ have appeared on various Craigslists, that free Internet portal where you can find everything from a used lawn tractor, guitar lessons or even a saucy Saturday night date. This week on the Charlotte, N.C., Craigslist, for example, there appeared an offer to become a “reader/evaluator” for a company known as Measurement ... (click for more)