Entries in Standard & Poor's (23)


Justice Department Goes After Standard & Poor's over Financial Crisis

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- The Justice Department is going after Standard & Poor's, the largest credit ratings firm, accusing it of inflating the housing bubble.  A federal lawsuit was reportedly filed Monday night in Los Angeles.

The government alleges that rosy endorsements of risky mortgage-backed securities ignored Standard and Poor's own standards.

According to The New York Times, the civil suit claims that between 2004 and 2007, S&P “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors."

The collapse of mortgage bonds triggered the financial crisis that cost investors billions of dollars.

In a statement reacting to the lawsuit, S&P called the government's lawsuit "entirely without factual or legal merit."  The company complained that it was being punished unfairly for failing to predict the collapse of the housing market. 

The lawsuit is the first federal crackdown against ratings firms linked to the mortgage mess.  Some state prosecutors are expected to join the suit.

Copyright 2013 ABC News Radio


Standard & Poor's Downgrades Spain's Sovereign Credit

Scott Eells/Bloomberg via Getty Images(NEW YORK) – Standard and Poor’s downgraded its rating on Spain’s debt Wednesday. In a statement, S&P cited rising unemployment, spending constraints, social discontent among regional and national governments, and doubts over the Eurozone’s commitment to backing Spain’s recapitalization as reasons for the downgrade.

As a result, the country’s short- and long-term sovereign credit ratings now stand at “BBB-/A-3” -- down from “BBB+/A-2,” which is just above junk status.

It was a move anticipated by industry experts, after Moody’s downgraded Spain’s sovereign credit as well.

Global markets, including markets in the U.S., traded lower Wednesday.  The downgrade announcement may impact Spain’s borrowing costs, which could alarm stock markets in trading on Thursday.

Copyright 2012 ABC News Radio


Home Prices Rise for Second Straight Month

Phillip Spears/Digital Vision/Thinkstock(NEW YORK) -- Home prices have increased for the second consecutive month, according to the latest Standard and Poor's/Case-Shiller Home Price Index.

Average monthly home prices increased 2.2 percent in May for the index’s 10- and 20-city composites.

“We have observed two consecutive months of increasing home prices and overall improvements in monthly and annual returns,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.  “However, we need to remember that spring and early summer are seasonally strong buying months so this trend must continue throughout the summer and into the fall.”

The 10- and 20-city composites had annual rates of decline of one percent and 0.7 percent, respectively, compared with May 2011.  Only three cities (Boston, Charlotte and Detroit) had annual returns worsen in May.

“While still negative, these annual changes are the best we’ve since in at least 18 months,” Blitzer said.

Zillow’s chief economist, Stan Humphries, said May was “a good month” for housing with existing home sales almost 10 percent higher than year-ago levels, supply shortages in some markets and a declining mix of foreclosure resales that affect the Case-Shiller index.

“Moreover, all of the data that has come out in the two months since May indicates that the housing market is continuing to slowly heal,” Humphries said.

Although he expects the index will show monthly declines in the latter half of the year, Humphries said that was “a function of seasonality” of a rising share of foreclosures in overall sales, which decline in the fall and winter.

“Overall, we remain cautiously optimistic that home values are at a bottom nationally,” he said, “even while our expectations for price appreciation in the next couple of years are muted.”

Copyright 2012 ABC News Radio


Home Prices Rise in Nearly All Cities

Stockbyte/Thinkstock(NEW YORK) -- The trend is now clear: The worst of the housing slump is over in many parts of the country.

Home prices rose in nearly all major U.S. cities in April, according to the latest Standard & Poor's/Case-Shiller home price index.  The average increase in the 20 cities tracked was 1.3 percent from March -- the first rise in seven months.

The biggest increases were reported in Phoenix, San Francisco and Washington. Detroit was the only city where prices fell, 3.6 percent.

The increases partly reflect the impact of the spring buying season. The month-to-month prices aren’t adjusted for seasonal factors. Still, prices in half of the cities are up over the past 12 months. The largest gain was in Phoenix, where prices rose 8.6 percent compared to last year.

Monday’s Commerce Department report on new home sales also brought good news. It found that Americans bought new homes in May at the fastest pace in more than two years -- up 7.6 percent compared with the month before.

For five years, the housing slump and mortgage mess have been a drag on jobs and the economy. Now, that trend appears to be coming to a close.

But the housing recovery still has a long way to go. Sales are still way below where they were during the boom years.

Copyright 2012 ABC News Radio


Moody’s Bank Downgrade May Mean Higher Lending Rates

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- For the second time in a year, Moody’s downgraded 15 global banks. The credit ratings agency downgraded five of the biggest U.S. banks on Thursday, and that may lead to higher rates for consumer and even tighter lending policies.

All 15 banks were downgraded in response to lower bank profitability unlike the last downgrade in November, which was based on Moody’s change in methodology.  Moody’s and Standard & Poor’s ratings help set the rates at which banks can borrow and therefore the rates they can extend to businesses and consumers.

On Friday morning, stocks, led by banks, rallied after the second-worst sell-off of the year on Thursday. Analysts viewed the rally as a sign that Moody’s was off-base in lowering the credit ratings of the banks, which are much stronger financially than they were three years ago.

The Dow Jones Industrial average rose 0.49 percent to 12,635 at mid-morning while the S&P 500 advanced 0.41 percent to 1,331. The Nasdaq composite was up 0.52 percent to 2,874.

The stock prices of the five downgraded U.S. banks jumped on Friday morning.

Shares of Bank of America were up 0.64 percent to $7.87. JPMorgan Chase & Co. shares jumped 2.17 percent to $36.29. Shares of Goldman Sachs Group increased 0.64 percent to $94.50. Citigroup’s stock was up 1.15 percent to $28.15 a share. Morgan Stanley shares increased over 2 percent to $14.25.

On Thursday, Moody’s Global Banking Managing Director Greg Bauer said in a statement that the downgraded banks “have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities.”

“Ultimately, the downgrades are likely to trigger some near-term volatility,” said Jody Lurie, corporate credit analyst at Janney Capital Markets.

In the long term, banks that were downgraded into the triple B range will have higher costs to finance their lending activities. If those banks were actually in need of financing, that may affect retail lending activities, such as mortgages and small business loans. Theoretically, banks that were not downgraded may be able to provide better rates, Lurie said.

“In some ways, Moody’s move is a self-fulfilling prophecy: higher financing costs equals less profitability,” she said.

Copyright 2012 ABC News Radio


No End in Sight for US Housing Slump

Stockbyte/Thinkstock(NEW YORK) -- The housing slump is far from over.

Average home prices have tumbled to their lowest level in nearly a decade, according to the closely watched Standard & Poor's/Case-Shiller home-price index.

A separate report from the Commerce Department says new home sales fell last month by the largest amount in more than a year.  The total fell to a seasonally adjusted annual rate of 328,000 units.  That followed a 7.3 percent increase in February.

The numbers from both reports show the housing market remains under strain.

"My take is that things are improving year over year in the housing market in general but we have a very long and bumpy road to recovery," says Doug Lebda, CEO of the home loan site

The S&P/Case-Shiller index shows that prices fell in February from January in 16 of the 20 cities it follows.

Miami, San Diego and Phoenix were the bright spots in the report -- they were among the hardest hit cities in the housing crisis and showed price gains compared to a month ago.

Atlanta showed the weakest housing market; home prices in the city are down 17.3 percent compared to a year ago.  Chicago at 6.9 percent and Cleveland at 4.4 percent also saw steep declines.

Further, Atlanta, Charlotte, N.C., Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa, Fla., posted new all-time lows, according to the index.

Average home prices across the United States are back to the levels they were in late 2002, according to S&P’s 20-City Composite Index.

New home sales numbers were revised higher for February, which is why the March drop in the government report was so large.

"What we have really is for the first quarter of the year a reasonably small but solid increase in home sales over the fourth quarter of last year," says David Crowe, chief economist at the National Association of Homebuilders.

Copyright 2012 ABC News Radio


Home Prices Hit Lowest Level Since Housing Crisis

iStockphoto/Thinkstock(NEW YORK) -- U.S. home prices hit their lowest levels at the end of 2011 since mid-2006, according to Standard & Poor's Case-Shiller home-price indexes.

The national composite index finds that home prices are now down 33.8 percent from their peak in the second quarter of 2006, when the housing bubble began to burst.   Atlanta, Las Vegas, Seattle and Tampa, Fla. home prices in particular have dropped to new lows.

Prices were down in 19 of the 20 cities tracked in December compared to a year ago.  The only city to post a year-over-year increase was Detroit.

Copyright 2012 ABC News Radio


S&P to Downgrade France's 'AAA' Credit Rating

Datacraft Co Ltd/Getty Images(PARIS) -- Standard & Poor’s downgraded France's credit rating Friday from AAA to AA+, French Finance Minister François Baroin confirmed.

Story developing...

Copyright 2012 ABC News Radio


US Stock Futures Up as Global Markets Slip Amid S&P Warning

Comstock/Thinkstock(NEW YORK) -- U.S. stock futures are holding on to slight gains Tuesday morning despite a warning issued to euro zone nations that has sent global markets downhill.

Standard and Poor's announced late Monday that 15 members of the euro zone could be subject to a credit rating downgrade due to the debt crisis that has been plaguing the region.  The warning excluded Cyprus, which had already been placed under negative watch, and Greece.

The news rattled investors overseas, sending European stocks lower on Tuesday and causing Asian ones to close down.  Japan's Nikkei index tumbled 1.39 percent, Australia’s S&P/ASX 200 dropped 1.37 percent, Hong Kong’s Hang Seng fell 1.24 percent, South Korea’s Kospi lost 1.04 percent, and China's Shanghai Composite slipped 0.31 percent.

Copyright 2011 ABC News Radio


SEC Subpoenas Firms on Possible Insider Trading before US Downgrade

Ryan McVay/Thinkstock(WASHINGTON) -- Federal financial regulators have reportedly stepped up their investigation into cases of possible insider trading before the U.S. government's credit rating was downgraded last month.

Citing people familiar with the matter, The Wall Street Journal says the Securities and Exchange Commission wants to know more about traders who bet the stock market would tumble just before Standard and Poor's downgraded the U.S. from its triple-A rating on Aug. 5.  Those trades could have been hugely profitable.

SEC regulators have issued subpoenas, demanding more information from hedge funds, specialized trading shops and other firms, according to the Journal.  But it may be difficult to prove wrongdoing -- the downgrade was rumored for weeks, especially in the hours before the announcement was made.

Copyright 2011 ABC News Radio

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