Daily News: February 11, 2013

Bloomberg: S&P Granted Top Grades to Doomed Lehman CDO

Bloomberg reported that a unit of New York Life Insurance (NYLI) issued a $1.5 billion collateralized debt obligation, underwritten by Lehman Brothers, that defaulted less than a year later is one of dozens of deals named in the Justice Department’s lawsuit accusing S&P of deliberately misstating the risks of mortgage bonds as it sought to keep its share of the booming business of repackaging home loans for sale as securities.

Bloomberg said, according to the DOJ’s complaint filed in federal court, Eastern Financial Florida Credit Union lost its investment after purchasing a portion of the NYLI CDO, relying in part on S&P’s assessment of the securities.

The U.S. is seeking penalties against S&P and its parent, McGraw-Hill, which may amount to more than $5 billion, based on losses suffered by federally insured financial institutions, Bloomberg notes.

To read the Bloomberg article, click here.

Previously on abfjournal.com:

S&P Suit Imperils McGraw-Hill Profit Gain, Friday, February 08, 2013