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State sues S&P over flawed ratings of securities

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Indiana has joined a parade of states suing Standard & Poor’s over its awarding of favorable ratings to securities that blew up when the housing market collapsed.

Indiana’s case, filed Thursday in Marion Superior Court, charges S&P with “systematically and intentionally” misrepresenting its analysis of securities backed by commercial or residential mortgages in order to “maximize revenue and market share.”

At least 17 states have filed similar lawsuits. Indiana’s case, filed by Securities Commissioner Chris Naylor, does not specify the amount of damages the state is seeking. It alleges fraud, deception and violations of the Indiana Uniform Securities Act.

S&P, a unit of New York-based McGraw-Hill Cos., has denied wrongdoing and said that any lawsuit would be without merit.

The state says investors relied on S&P to accurately rate the riskiness of various mortgage-backed securities.

Issuers paid the firm and its chief rival, Moody's Investors Service, substantial amounts to assess the investments, which grew ever-more complex through the 2000s. The state charges that S&P's desire to win additional business colored its analysis.

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  • Charlie stole my comment title
    As I was reading this, the first thought that came to me was 'Bout Time! This crisis ruined more people than Bernie Madoff. Bottom line, don't live beyond your means though.
  • 'bout time
    From Wiki: According to the Financial Crisis Inquiry Report, 73% of the mortgage-backed securities Moody's had rated triple-A in 2006 were downgraded to junk by 2010.[37] In its "Conclusions on Chapter 8", the Financial Crisis Inquiry Commission stated: "There was a clear failure of corporate governance at Moody’s, which did not ensure the quality of its ratings on tens of thousands of mortgage-backed securities and CDOs."[38] ... In April 2013, Moody's reached a settlement avoiding what would have been their first jury trial over crisis-era ratings. The fourteen plaintiffs, were led by Abu Dhabi Commercial Bank and King County, Washington. They claimed lawsuits filed in 2008 and 2009 that Moody's misled them by allegedly inflating ratings on two so-called structured investment vehicles they purchased.[46] ... Somebody screwed up. Another reason: failure of people repay loans that were far beyond their means.

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    1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

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    4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

    5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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