Standard & Poor's Ratings Services has escalated its legal battle with the U.S. Justice Department, accusing it of filing its $5 billion lawsuit against S&P in "retaliation" for the company's downgrade of America's debt in 2011, The Wall Street Journal reported yesterday. S&P's defense, made in a court filing yesterday, shows that the world's largest credit-rating company is digging in as it fights the Justice Department's Feb. 4 lawsuit, which accuses S&P of misrepresenting its ratings process during the years before the financial crisis. The Justice Department said that federally insured banks and credit unions bought debt deals rated highly by S&P because they thought such top-notch ratings indicated that there was less risk than lower-rated securities. But behind the scenes, according to the government, S&P was assigning high ratings to deals in order to please bankers and other clients. S&P says that such claims are "meritless" and believes that the U.S. lawsuit is politically motivated, but the language in yesterday’s court filing is its strongest to date. A Justice Department spokeswoman countered that "the allegation is preposterous." The civil complaint against S&P is a high-stakes lawsuit for the Justice Department, which seeks to demonstrate that it is holding institutions accountable for the financial crisis.
