What S&P's Role Was in the financial meltdown
A couple of days ago is was announced that the S&P financial rating service was being sued by the U.S. Department of Justice for $5 billion dollars. A very detailed explanation of what they did can be found here.
The short answer is that back in 2006 there was a real demand for more AAA securities. The S&P is alleged to rated some financial securities as AAA that weren't. This caused people to believe they were buying a safe investment when they weren't. Their defense is they used took the word of others that the rating system they used would work. However, the Justice Department is arguing there was a lack of due diligence. The company is being charged with bank and wire fraud but the Justice Department so far hasn't brought any criminal charges against anyone.
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