The S&P was the first major credit agency to downgrade the United States' triple-A credit rating.
Now the S&P may pay a heavy price for doing so as the Obama administration gets revenge with legal action against the rating agency.
The New York Times reported Monday: "The Justice Department plans to file civil fraud charges against the nation’s largest credit-ratings agency, Standard & Poor’s, accusing the firm of inflating the ratings of mortgage investments and setting them up for a crash when the financial crisis struck."
The paper said the suit could be filed within days and blamed the agency for bestowing high credit ratings to bundled mortgage securities, making them appear safer than they actually were for investors.
The securities known as collateralized debt obligations (CDOs) suffered a meltdown in the wake of the housing debacle that began in 2007.
The Times' story noted that neither Fitch nor Moody's, credit agencies that also gave high credit ratings to such mortgage instruments, have been included in the Justice Department suit.
Fitch or Moody's also have never downgraded the U.S. credit rating.
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