Moody’s Required to Pay Millions In Rating Inflation Settlement

The second largest credit-rating agency, Moody’s, has agreed to pay $864 million. The money is going toward the settling of federal and state claims of inflated mortgage investments. Moody’s admits it did not meet its own standards when it came to rating security risks baking home mortgages and collateral debts.

The deal made on Friday was with the Justice Department and the attorney general of twelve states and the District of Columbia. Moody’s pays $437.5 million to the Justice Department, and the other $426.3 is divided among the states.

Moody’s, Standard & Poor’s, and Fitch received heavy criticism for low-risk ratings and faulty mortgage securities. However, while the company sold low ratings and mortgage securities that weren’t up to par, they managed to reap the benefits of lucrative fees. Standard & Poor’s made a similar deal with nineteen states and the Justice Department for $1.4 billion.

Moody’s confessed that its rather loose standards for specific financial products. This drifted to many banks all over the world which led to financial collapse in 2008. The collapse led the largest recession in the U.S.

According to the settlement, Moody’s agrees to change the methods it currently uses for its ratings. It will also make sure that its employees receive no compensations based on company performance.

In a statement, the company confirmed, “As part of the resolution, Moody’s has agreed to maintain, for the next five years, a number of existing compliance measures and to implement and maintain certain additional measures over the same period.”

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

Have a tip we should know?


Most Read

  1. News
    Pandora Papers Financial Leak Shows Us the Secrets of the World’s Rich and Powerful
    3 years ago
  2. Health
    US Supreme Court Rejects J & J TALC Cancer Case Appeal
    3 years ago
  3. Lifestyle
    9 Habits that Drain your Daily Focus and How to Avoid Them
    3 years ago
    Women’s Demand for Shapewear – the big Trends
    3 years ago
    Valentino Launches its Cosmetics Line
    3 years ago
  6. Health
    US Promises to Share 60 million Doses of AstraZeneca Vaccines
    3 years ago
  7. Health
    UK Offers Aid Amid Surging COVID-19 Cases in India
    3 years ago
  8. Sports
    Thousands of fans welcome Charlton funeral cortege at Old Trafford
    7 months ago
  9. News
    Brit left fighting for life after train derails in Argentinia
    7 months ago
    Dubai faces down airline rivals with $50 bln jet orders
    7 months ago
  11. Sunak
    UK’s Sunak brings back Cameron, sacks Braverman
    7 months ago
  12. Sports
    Man United’s Hojlund, Eriksen withdrawn from Denmark team duty
    7 months ago
  13. Health
    Autumn Sneezing Syndrome is on the rise… here’s what you can do
    7 months ago
  14. Canada
    Canada beat Italy to win Billie Jean King Cup for first time
    7 months ago

Follow @rushhourdaily: