Standard & Poor's is close to an agreement to pay $1.4 billion to settle claims by the Justice Department and states attorneys general that it inflated subprime mortgage-bond ratings before the financial crisis, according to two people with knowledge of the talks.
A settlement may be announced as soon as Tuesday, said the people, who asked not to be identified because the negotiations are private. The ratings company has been accused by the government of fueling the biggest financial crisis since the Great Depression by giving top ratings to the mortgage debt in order to win business from Wall Street banks. Reuters reported yesterday that the settlement could be as much as $1.5 billion.
The deal is separate from an agreement reached today with the U.S. Securities and Exchange Commission that settles an investigation into grades it gave to commercial-mortgage securities in 2011.
Catherine Mathis, a spokeswoman for S&P, declined to comment, as did Emily Pierce, a Justice Department spokeswoman.
The U.S. sued S&P in February 2013 over the subprime mortgage ratings, seeking $5 billion. Nineteen states and the District of Columbia also filed lawsuits against the unit of McGraw Hill Financial Inc. Because of the number of parties, an agreement could be delayed beyond next week, one of the people said.
