They recently handed out a “junk” status credit rating to Croatia, but now they have worries of their own. The US government is expected to file a law suit against Standard & Poor’s Rating Services, the agency who before Christmas downgraded Croatia’s credit rating to ‘junk’.
There have been whispers in many circles that the agency have not been completely transparent when handing out ratings, and now the US Justice Department is alleging that it fraudulently gave high ratings to mortgage debt that later plunged in value and helped fuel the 2008 financial crisis.
Stocks in Standard & Poor’s parent company fell yesterday 13% as news broke. Fellow credit rating agency Moody’s, who only last week downgraded Croatia’s credit rating to junk also, have been blamed for helping fuel the financial crisis by assigning questionable AAA ratings to trillions of dollars in risky securities, which resulted in billions of dollars being lost.