Justice Department Sues S&P

The Justice Department (DOJ) announced that it was suing credit rating agency S&P for "Knowingly and with the intent to defraud, devised and participated in and executed a scheme to defraud investors." in the company's rating of mortgage backed securities. S&P argued that not only did it not intend to defraud, but that Moody's and Fitch, which were not sued, had similar ratings on the bonds. The absence of Moody's and Fitch from the lawsuit has led to speculation that the S&P lawsuit is payback for the downgrade of U.S. government bonds by S&P in August 2011. The DOJs lawsuit argues that S&P should have updated its computer models to LEVELS 6.0 from LEVELS 5.6, which would have reduced the credit rating for at least some of the bonds.