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February 4, 2015

Charlotte Observer: North Carolina receiving $21.5M in settlement with S&P over crisis-era ratings

“North Carolina will receive $21.5 million as part of a settlement with Standard & Poor’s to resolve claims that the credit-rating agency knowingly inflated its ratings of risky mortgage bonds that helped create the financial crisis.

“The settlement is part of a $1.38 billion accord announced Tuesday between the U.S. Justice Department and Standard & Poor’s Financial Services LLC, a subsidiary of McGraw Hill Financial, over ratings issued from 2004 to 2007.

“The deal resolves lawsuits filed by the attorneys general of 19 states and the District of Columbia.

“N.C. Attorney General Roy Cooper announced the state’s portion of the settlement at a news conference in Raleigh. Cooper said the state filed its lawsuit in 2013, the same year the Justice Department sued.

“S&P’s “highly inflated ratings” harmed North Carolina by helping trigger the financial crisis, Cooper said at the news conference.

“Good ratings led investors to make bad bets on risky securities, and this contributed to job losses and foreclosures that hit taxpayers and businesses in North Carolina hard,” he said. “This deceit cost North Carolina jobs and income, and that hurt taxpayers.”

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“Some critics said the settlement does not go far enough.

“Dennis Kelleher, president of nonprofit advocacy group Better Markets, in a statement Tuesday called the settlement “grossly inadequate.” Kelleher said the accord falls short by, among other things, lacking an admission of guilt or details on “exactly” what S&P did, how it profited and whom it harmed. “The American people deserve much better.”

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Read the full Charlotte Observer article by Deon Roberts here.

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