Baku. 14 January. REPORT.AZ/ Moody’s Corp. has agreed to pay nearly 864 million USD to settle federal and state claims it gave inflated ratings to risky mortgage investments in the years leading up to the financial crisis. Report informs citing the RIA Novosti, it calls for 437.5 million USD to go to the Justice Department and 426.3 million USD to be divided among the states and the District of Columbia. Moody’s reached the agreement with the U.S.Justice Department and 21 states, which accused the company of inflating ratings on mortgage securities that were at the center of the 2008 financial crisis, the Justice Department said Friday in a statement.
In addition, Standard & Poor’s was also widely criticized for giving low-risk ratings to the risky mortgage securities being sold ahead of the crisis, while they reaped lucrative fees.Standard & Poor’s, agreed to pay nearly 1.3 billion USD to settle similar allegations by the Justice Department.
Driven by positive evaluations of these agencies, many investors bought mortgage securities, and later, when the mortgage market collapsed, suffered huge losses. According to many experts, the collapse of the mortgage market contributed to the beginning of the financial crisis.