Subprime Mortgages: Justice Department and Hadn T

subprime mortgages: Some 437.5 million will go to the Justice Department and 426.3 million to be divided among the states and the District of Columbia, according to Deutsche Welle. In March, Moody's agreed to pay 130 million to settle claims by the California Public Employees' Retirement System over allegedly inflated ratings on residential-mortgage bond deals. Twenty-one US states and the Justice Department accused Moody's Investors Services, Moody's Analytics and parent company Moody's Corporation of overvaluing the ratings of securities backed by subprime mortgages and at-risk loans. In the settlement, the world's second-largest credit ratings agency acknowledged that it hadn't followed its own standards, stating that it had used a more lenient standard for certain financial products and had not made public the differences from its published standards. The long con The credit rating agencies - whose role is to rate debt securities on the basis of a debtor's ability to pay back lenders - played a key role both in fuelling and then not reining in the US subprime mortgage crisis of 2007-2008, which precipitated the global downturn and long subsequent period of austerity. Moody's failed to adhere to its own credit rating standards and fell short on its pledge of transparency in the run-up to the Great Recession, Principal Deputy Associate Attorney General Bill Baer said in a statement. (news.financializer.com). As reported in the news.