The Justice Department filed a $5 billion civil lawsuit late Monday against the nation's largest credit-ratings agency, Standard & Poor's, claiming the firm gave top ratings to the substandard mortgage securities whose massive failures sparked the 2008 financial crisis.
"Put simply, this alleged conduct is egregious - and it goes to the very heart of the recent financial crisis," said Attorney General Eric Holder, the Associated Press reports. He said it was "an important step forward in our ongoing efforts to investigate and punish the conduct that is believed to have contributed to the worst economic crisis in recent history."
The suit says S & P inflated ratings and understated risks associated with mortgage securities, in order to gain more business from the investment banks that issued those securities, the AP reports.
S & P issued a statement on Tuesday saying the lawsuit is without merit, Reuters reported. "Claims that we deliberately kept ratings high when we knew they should be lower are simply not true," the statement said.