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Idaho Benefits as Party to Massive Settlement With Moody's

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GERALT PIXABAY CREATIVE COMMONS 1.0
Idaho will share in a nationwide legal settlement with Moody's Corp. following a Department of Justice investigation that found the financial services company engaged in business practices leading up to the 2008 market collapse that “hurt Idahoans and our economy,” Wasden said in an announcement of the $864 million settlement. The Gem State's portion will be $7.48 million.

Combined with a 2015 settlement with Standard & Poor's, Idaho has recovered nearly $29 million from credit rating agencies.

Prosecutors alleged Moody's contributed to the worst financial crisis since the Great Depression, falling short on its pledge of transparency by downplaying risk to investors and consumers. Investigators said Moody's structured finance securities, particularly those backed by subprime mortgages, were at the center of the crisis, which continues to cast a long shadow over the economy.

Specifically, the investigation found evidence Moody's buckled under pressure from big banks to raise the rating of their securities. In turn, the banks used the ratings as a benchmark to sell the securities to their own investors in the form of pension or retirement plans.

Not only does the settlement hold Moody's accountable, Wasden said, "It's also a reminder that no company is above the law."

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