One of the world’s largest credit agencies has agreed to pay nearly $1 billion to settle claims by Arizona and other states that it did not rate risky mortgages accurately.
Arizona is one of 21 states plus the District of Columbia that will receive payment from Moody’s Corp. in an $864 million settlement. About half will go to the U.S. Justice Department.
Moody’s is a global financial-services company that rates stocks, bonds and other financial instruments for sale. In the settlement, Moody’s admits it did not accurately rate mortgage investments leading up to the financial crisis.
The U.S. Justice Department said Moody’s admits to assigning inflated ratings to residential mortgage-backed securities and collateralized debt obligations, the derivative products created from mortgages.
“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," said Principal Deputy Associate Attorney General Bill Baer of the U.S. Justice Department.
