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.”

 


Supreme Court To Hear Oral Arguments On Challenge To Electrocution, Six Other Cases

The Tennessee Supreme Court will hear oral arguments next week regarding whether a death row inmate can properly challenge the constitutionality of electrocution as a possible method of execution. The Court will consider only one issue of many that are part of a lawsuit by 34 death row inmates challenging Tennessee’s death penalty protocol. The electrocution issue is before ... (click for more)

Sustainability Professionals Launch New Organization To Support Growth In Sector

The new organization, Sustainability Professionals of Greater Chattanooga, has been formed to support employees who are dedicated to promoting sustainability practices within their corporations.   Elizabeth Hammitt, director of Environmental Stewardship and Community at EPB and president of Sustainability Professionals of Greater Chattanooga, envisioned such a group about ... (click for more)

Erlanger Chooses Epic Software For New $100 Million Electronic Medical Records System; CEO Judy Faulkner To Visit Chattanooga

Erlanger CEO Kevin Spiegel announced that the Chattanooga hospital has chosen Epic Systems for a new electronic medical records system that he said will cost close to $100 million over 10 years. He said Cerner was the other finalist for the major hospital expenditure. Mr. Spiegel said the new system will mean some 100 more jobs at Erlanger. He said Epic will bring up to 200 ... (click for more)

Red Bank Police Find 17 Animals In "Deplorable" Condition At Home On Oakland Terrace

Red Bank Police on Friday found 17 animals in "deplorable condition" after making a home check on Oakland Terrace. The Humane Educational Society was called in to assist. The HES said, " Officers entered the home on Oakland Terrace and rescued nine dogs, six cats and two rabbits that had been living in deplorable conditions. "These animals are currently ... (click for more)

Injustice Is Terrible, But Shouldn't Lead To Rioting - And Response (2)

Injustice is terrible.  Period.  I am totally wowed, amazed, and grateful that the six officers have been charged in Baltimore.  Justice will be done like with the officer that shot the man in the back.   That being said,  I don't understand why, when atrocities like this happen, protests and marches can evolve into terrible rioting.  Fortunately ... (click for more)

Roy Exum: ‘Red Meat To A Mob’

The city of Milwaukee is among the Top 20 Most Violent in the United States. It ranks No. 4 in poverty for cities its size, and is home to the most “make sense” sheriff in the world. I spent most of my morning reading to find out more about Milwaukee County Sheriff David Clarke because his is a voice we should have been listening to some time ago. He startled all of us on Friday ... (click for more)