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September 4, 2013

S&P Accuses U.S. of Suing to Avenge Ratings Drop

Standard & Poor’s Ratings Services escalated its legal battle with the U.S. Justice Department, accusing it of filing its $5 billion lawsuit against S&P in “retaliation” for the company’s downgrade of America’s debt in 2011.

S&P’s defense, made in a court filing on Tuesday, shows that the world’s largest credit-rating company is digging in as it fights the Justice Department’s Feb. 4 lawsuit, which accused S&P of misrepresenting its rating process in the years before the financial crisis.

The Justice Department said that federally insured banks and credit unions bought debt deals rated highly by S&P because they thought such top-notch ratings indicated there was less risk than lower-rated securities. But behind the scenes, the government alleged, S&P was assigning high ratings to deals in order to please bankers and other clients. S&P has said such claims are ‘meritless.’

S&P has previously indicated that it believes the U.S. lawsuit was politically motivated, but the language in Tuesday’s court filing is its strongest to date.”

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Read full Wall Street Journal article here

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