S&P faces US gov't suit over 2007 mortgage bond ratings

NEW YORK: The US Justice Department plans to sue Standard & Poors over its rating of mortgage bonds prior to the 2008 financial crisis, S&P said Monday.

The suit, according to S&P, targets its ratings in 2007 of certain collateralized debt obligations, packages of mortgages sold to investors that were at the center of the the 2008 financial crisis sparked by the US housing collapse.

S&P promised a vigorous defense, saying the looming lawsuit would be "entirely without factual or legal merit."

The company said that in 2007 and prior to that time it had downgraded a number of residential mortgage-backed securities ahead of other ratings agencies.

"With 20/20 hindsight, these strong actions proved insufficient -- but they demonstrate that the DoJ would be wrong in contending that S&P ratings were motivated by commercial considerations and not issued in good faith," S&P said.