S&P settles case with US Justice Department by backing down

New York

STANDARD & Poor's (S&P), the giant credit rating agency accused of inflating the sub-prime mortgage bubble, had long been convinced that a Justice Department lawsuit lacked merit. So convinced, in fact, that it portrayed the lawsuit as an act of "retaliation" for its decision to cut the credit rating of the United States in summer 2011.

Now that S&P is poised to settle that case, as well as lawsuits from 19 state attorneys general across the country, the rating agency is walking back that claim. As part of a US$1.37 billion settlement deal expected this week, S&P has agreed to acknowledge that it never found evidence supporting its accusations of retaliation, people briefed on the matter said.