Chicago — Attorney General Lisa Madigan today filed a lawsuit against Standard & Poor’s for its fraudulent role in assigning its highest ratings to risky mortgage-backed investments in the years leading up to the housing market crash.
Madigan filed her lawsuit today in Cook County Circuit Court, alleging that Standard & Poor’s, or S&P, compromised its independence as a ratings agency by doling out high ratings to unworthy, risky investments as a corporate strategy to increase its revenue and market share. The Attorney General’s lawsuit alleges that S&P ignored the increasing risks posed by mortgage-backed securities, instead giving the investment pools ratings that were favorable to its investment bank client base and S&P’s profits.
“Publically, S&P took every opportunity to proclaim their analyses and ratings as independent, objective and free from its desire for revenue,” Madigan said. “Yet privately, S&P abandoned its principles and instead used every trick possible to give deals high ratings in order to retain clients and generate revenue. The mortgage-backed securities that helped our market soar – and ultimately crash – could not have been purchased by most investors without S&P’s seal of approval.”
The Attorney General’s lawsuit cites numerous internal emails and conversations among S&P employees in the run up to the housing market’s crash that demonstrate the company misrepresented its ratings as objective and independent. In one such exchange, in April 2007, an online conversation via a company-based instant messenger application revealed employees discussing S&P ratings compared to the reality of risk involved, with an employee stating an investment “could be structured by cows and we would rate it.”
Madigan said investors relied on S&P ratings because they were historically rooted in the agency’s purported independence and objectivity. S&P’s internal code of conduct states its goal to “promote investor protection by safeguarding the integrity of the rating process.” But, the Attorney General’s lawsuit cites congressional testimony by a former managing director of S&P who revealed that “profits were running the show,” with ratings being assigned to risky investments to help drive profit margins for their clients.
S&P, a subsidiary of McGraw-Hill Companies, is one of the nation’s largest credit ratings agencies responsible for independently rating risk on behalf of clients and investors. Madigan said in the run up to the financial crisis, S&P consistently misrepresented the risk of mortgage-backed securities, assigning these securities its highest seal of approval – or AAA rating. This misrepresentation spurred investors to purchase securities that were far riskier than their ratings revealed.
Mortgage-backed securities are financial products made up of a pool of mortgages that are bundled together and sold as a security. The assets are backed by residential mortgages, including subprime mortgages. The performance of these investment products have significant, real-world implications for Illinois institutional investors, such as pension funds and 401(k) managers that make decisions about whether, and which, of these securities are appropriate investments. It was the misrepresentation of the true value of these risky mortgage pools that helped the housing market skyrocket and ultimately led to its collapse in 2008.
Today’s lawsuit is part of Attorney General Madigan’s continuing work to hold lenders accountable for their unlawful financial misconduct, and to provide relief and assistance to Illinois families struggling to save their homes. Most recently, in December 2011, Madigan and the U.S. Department of Justice reached a $335 million settlement with Countrywide, a subsidiary of Bank of America, for discriminating against thousands of Illinois borrowers of color during the height of the subprime mortgage lending spree. The settlement will provide restitution to harmed Illinois borrowers and is the largest settlement of a fair lending lawsuit ever obtained by a state attorney general. The Attorney General is litigating a similar lawsuit against Wells Fargo alleging widespread discrimination against African American and Latino borrowers.
Madigan led an earlier lawsuit against Countrywide, which resulted in a nationwide $8.7 billion settlement in 2008 over the company’s predatory lending practices. The Attorney General also reached a $39.5 million settlement with Wells Fargo over the bank’s deceptive marketing of extremely risky loans called Pay Option ARMs, and in 2006, Madigan obtained more than $10 million in restitution for Illinois homeowners as part of a $325 billion multi-state settlement with Ameriquest over the former mortgage giant’s deceptive sales of predatory subprime mortgages.
Assistant Attorneys General Vaishali Rao and Vijay Raghavan are handling the case for Madigan’s Consumer Fraud Bureau.
Showing posts with label cook county. Show all posts
Showing posts with label cook county. Show all posts
Wednesday, January 25, 2012
Monday, October 26, 2009
Fritchey Files Petitions for Cook County Board Seat
From State Representative John Fritchey
CHICAGO – State Rep. John Fritchey today filed petitions to become the next Cook County Commissioner for the 12th District. Last month, Fritchey stated that he would not be seeking re-election to the General Assembly seat that he has held since 1996, opting to run to fill the vacancy created by Cook County Commissioner Forrest Claypool, who has announced he will not be running for another term.
Congressman Mike Quigley and Commissioner Claypool joined Rep. Fritchey at his announcement of candidacy for the post on September 1, 2009. Both pledged their full support of Fritchey’s bid, citing the need for the County Board to have a proven reformer who can hit the ground running.
Rep. Fritchey was first elected to the Illinois House in 1996, representing a district including the neighborhoods of Bucktown, DePaul, Roscoe Village, Lakeview, and Ravenswood. The former Illinois Assistant Attorney General has been the Chairman of the House Civil Judiciary Committee for the past seven years and previously chaired the House Consumer Protection Committee.
During his legislative tenure, Fritchey has been an unwavering reform leader in Springfield, having authored and sponsored numerous ethics and campaign finance reform laws. Milestone accomplishments include his work with then-State Senator Barack Obama to pass the Ethics Act of 2003 and more recently, the enactment of a law to finally ban ‘pay-to-play’ politics in Illinois.
A vocal critic of both former Governors George Ryan and Rod Blagojevich, Fritchey was a member of the Special Investigative Committee that ultimately drafted the impeachment resolution against Blagojevich.
“The recent departure of former Commissioner Quigley and Commissioner Claypool’s decision not to seek reelection have created an urgent need for reform leadership on the Cook County Board. Talks between Congressman Quigley, Commissioner Claypool, and myself convinced me to relinquish my seniority in the House in order to run for the Board and be that voice.”
“Now more than ever, we need a proven reformer with the common-sense, experience, and willingness to take on the big issues,” said Congressman Quigley. “The times demand and the voters deserve elected officials like John Fritchey who will challenge the status quo and fight for taxpayers. Reforming government saves us money, and amidst the greatest economic downturn in a generation, we can’t afford not to keep working for change. John will be a terrific addition to the Board and a fitting successor to our friend Forrest Claypool.”
Working together to fix county government is nothing new for the three officials. Over the years, Fritchey, Quigley, and Claypool have joined forces to take on initiatives including the elimination of pension abuses by county officials, as well as trying to lower the number of votes needed to override a veto by the Board President – an issue passed by the Illinois House during veto session this month.
“Even when the odds were against us, I’m proud to have been able to accomplish a great deal at the County,” said Commissioner Claypool. “John has had a similar experience at the State, and so he is ideally-suited to not just carry on, but build upon, the work Mike and I have done on the County Board. When it comes to fighting for taxpayers and cleaning up Cook County, John Fritchey is the clear choice to become the next Commissioner for the 12th District.”
“Just like nature, reform abhors a vacuum,” said Fritchey. “Mike and Forrest have been ground-breaking reformers at the County level, and with the loss of their two key board votes, we need to make sure that taxpayers are getting responsible and effective government for their dollars. Serving on the County Board will provide an opportunity to continue my past work and bring it closer to home. Whether it is property tax reform, increased transparency and accountability, or environmental initiatives, there will be no shortage of important issues to take on.”
“I am as proud of my record and my ideas as I am to receive the support of these two County reform pioneers,” said Fritchey. “I’m looking forward to making a very compelling case to the voters and starting this next chapter of public service.”
The Primary Election will take place on February 2, 2010.
Tuesday, September 1, 2009
Fritchey to Seek Cook County Board Seat
From the Campaign Office of Rep. John Fritchey for Cook County Board
CHICAGO – In a significant political announcement, State Rep. John Fritchey stated that he will not seek re-election to the General Assembly seat that he has held since 1996, opting to run to fill the vacancy created by Cook County Commissioner Forrest Claypool, who has announced he will not be running for another term. Congressman Mike Quigley and Commissioner Claypool joined Rep. Fritchey at his announcement and pledged their full support of Fritchey’s bid, citing the need for the County Board to have a proven reformer who can hit the ground running.
Rep. Fritchey was first elected to the Illinois House in 1996, representing a district including Bucktown, DePaul, Roscoe Village, Lakeview, and Ravenswood. The former Illinois Assistant Attorney General has been the Chairman of the House Civil Judiciary Committee for the past seven years. He previously chaired the House Consumer Protection Committee.
During his legislative tenure, Fritchey has been an unwavering reform leader in Springfield, having authored and sponsored numerous ethics and campaign finance reform laws. Milestone accomplishments include his work with then-State Senator Barack Obama to pass the Ethics Act of 2003 and more recently, the enactment of a law to finally ban ‘pay-to-play’ politics in Illinois.
A vocal critic of both former Governors George Ryan and Rod Blagojevich, Fritchey was a member of the Special Investigative Committee that drafted the impeachment resolution against Blagojevich.
“When I first arrived in Springfield, nobody really wanted to take on the fight to reform state government,” said Fritchey. “There were a lot of uphill battles and even resentment, but I persisted and slowly but surely, we started fixing a very broken system. And while there’s definitely still work to be done, the good news is that there are a lot more legislators now willing and able to do it.”
By contrast, Fritchey stated that the recent departure of former-Commissioner Quigley, who defeated Fritchey in a Special Primary this past March to succeed Congressman Rahm Emanuel, and Commissioner Claypool’s decision not to seek reelection, have created an urgent need for reform leadership on the Cook County Board. Talks among the three elected officials convinced Fritchey to give up his seniority in the House to run for the Board.
“Now more than ever, we need a proven reformer with the common-sense, experience, and willingness to take on the big issues,” said Congressman Quigley. “The times demand and the voters deserve elected officials like John Fritchey who will challenge the status quo and fight for taxpayers. Reforming government saves us money, and amidst the greatest economic downtown in a generation, we can’t afford not to keep working for change. John will be a terrific addition to the Board and a fitting successor to our friend Forrest Claypool.”
Working together to fix county government is nothing new for the three officials. Over the years, Fritchey, Quigley, and Claypool have joined forces to take on initiatives including the elimination of pension abuses by county officials, as well as trying to lower the number of votes needed to override a veto by the Board President – an issue looming large as the Board once again tries to roll back the recent county sales tax hike.
“Even when the odds were against us, I’m proud to have been able to accomplish a great deal at the County,” said Commissioner Claypool. “John has had a similar experience at the State, and so he is ideally-suited to not just carry on, but build upon, the work Mike and I have done on the County Board. When it comes to fighting for taxpayers and cleaning up Cook County, John Fritchey is the clear choice to become the next Commissioner for the 12th District.”
“Just like nature, reform abhors a vacuum,” said Fritchey. “Mike and Forrest have been groundbreaking reformers at the County level, and with the loss of their two key board votes, we need to make sure that taxpayers are getting responsible and effective government for their dollars. Serving on the County Board will provide an opportunity to continue my past work and bring it closer to home. Whether it is property tax reform, increased transparency and accountability, or environmental initiatives, there will be no shortage of important issues to take on.”
“I am as proud of my record and my ideas as I am to receive the support of these two County reform pioneers,” said Fritchey. “I’m looking forward to making a very compelling case to the voters and starting this next chapter of public service.”
The Primary Election will take place in February 2010.
CHICAGO – In a significant political announcement, State Rep. John Fritchey stated that he will not seek re-election to the General Assembly seat that he has held since 1996, opting to run to fill the vacancy created by Cook County Commissioner Forrest Claypool, who has announced he will not be running for another term. Congressman Mike Quigley and Commissioner Claypool joined Rep. Fritchey at his announcement and pledged their full support of Fritchey’s bid, citing the need for the County Board to have a proven reformer who can hit the ground running.
Rep. Fritchey was first elected to the Illinois House in 1996, representing a district including Bucktown, DePaul, Roscoe Village, Lakeview, and Ravenswood. The former Illinois Assistant Attorney General has been the Chairman of the House Civil Judiciary Committee for the past seven years. He previously chaired the House Consumer Protection Committee.
During his legislative tenure, Fritchey has been an unwavering reform leader in Springfield, having authored and sponsored numerous ethics and campaign finance reform laws. Milestone accomplishments include his work with then-State Senator Barack Obama to pass the Ethics Act of 2003 and more recently, the enactment of a law to finally ban ‘pay-to-play’ politics in Illinois.
A vocal critic of both former Governors George Ryan and Rod Blagojevich, Fritchey was a member of the Special Investigative Committee that drafted the impeachment resolution against Blagojevich.
“When I first arrived in Springfield, nobody really wanted to take on the fight to reform state government,” said Fritchey. “There were a lot of uphill battles and even resentment, but I persisted and slowly but surely, we started fixing a very broken system. And while there’s definitely still work to be done, the good news is that there are a lot more legislators now willing and able to do it.”
By contrast, Fritchey stated that the recent departure of former-Commissioner Quigley, who defeated Fritchey in a Special Primary this past March to succeed Congressman Rahm Emanuel, and Commissioner Claypool’s decision not to seek reelection, have created an urgent need for reform leadership on the Cook County Board. Talks among the three elected officials convinced Fritchey to give up his seniority in the House to run for the Board.
“Now more than ever, we need a proven reformer with the common-sense, experience, and willingness to take on the big issues,” said Congressman Quigley. “The times demand and the voters deserve elected officials like John Fritchey who will challenge the status quo and fight for taxpayers. Reforming government saves us money, and amidst the greatest economic downtown in a generation, we can’t afford not to keep working for change. John will be a terrific addition to the Board and a fitting successor to our friend Forrest Claypool.”
Working together to fix county government is nothing new for the three officials. Over the years, Fritchey, Quigley, and Claypool have joined forces to take on initiatives including the elimination of pension abuses by county officials, as well as trying to lower the number of votes needed to override a veto by the Board President – an issue looming large as the Board once again tries to roll back the recent county sales tax hike.
“Even when the odds were against us, I’m proud to have been able to accomplish a great deal at the County,” said Commissioner Claypool. “John has had a similar experience at the State, and so he is ideally-suited to not just carry on, but build upon, the work Mike and I have done on the County Board. When it comes to fighting for taxpayers and cleaning up Cook County, John Fritchey is the clear choice to become the next Commissioner for the 12th District.”
“Just like nature, reform abhors a vacuum,” said Fritchey. “Mike and Forrest have been groundbreaking reformers at the County level, and with the loss of their two key board votes, we need to make sure that taxpayers are getting responsible and effective government for their dollars. Serving on the County Board will provide an opportunity to continue my past work and bring it closer to home. Whether it is property tax reform, increased transparency and accountability, or environmental initiatives, there will be no shortage of important issues to take on.”
“I am as proud of my record and my ideas as I am to receive the support of these two County reform pioneers,” said Fritchey. “I’m looking forward to making a very compelling case to the voters and starting this next chapter of public service.”
The Primary Election will take place in February 2010.
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