US DoJ to sue a ratings agency over 2007 MBS ratings.

Bloomberg: “The U.S. Justice Department intends to sue Standard & Poor’s over ratings it gave certain collateralized debt obligations in 2007, the company said today. The Justice Department and state prosecutors may file lawsuits this week against S&P, the largest credit ratings firm, alleging wrongdoing in its ratings of mortgage bonds in the lead up to the 2008 financial crisis, according to two people familiar with the matter.”“Inflated grades on bonds backed by subprime mortgages helped ignite the worst financial crisis since the Great Depression when their values plummeted more than five years ago. ….“A DOJ lawsuit would be entirely without factual or legal merit,” the company said today in a statement. “It would disregard the central facts that S&P reviewed the same subprime mortgage data as the rest of the market -– including U.S. Government officials who in 2007 publicly stated that problems in the subprime market appeared to be contained -– and that every CDO that DOJ has cited to us also independently received the same rating from another rating agency.”