More than $50 million will go back into Illinois’ pension systems thanks to a settlement with a credit rating agency. Standard and Poor’s is paying out $1.4 billion nationally over claims it inflated ratings to risky mortgage-backed securities in the years before the 2008 financial crisis. Illinois Attorney General Lisa Madigan says if S&P had acted as a truly independent ratings agency, it could have called attention to the risk of the investments and even prevented the crisis that followed.
“It was S&P’s job to alert the marketplace,” Madigan said, “but instead of raising red flags, the company betrayed its responsibility and rigged its own system in order to increase profits.” Madigan says the money will go into Illinois’ pension systems because those funds likely wouldn’t have purchased mortgage-backed securities if it weren’t for S&P giving those risky investments high ratings.
