Standard & Poor's may complete as early as Monday a $1.38-billion accord with the U.S. and 19 states, including California, over claims that it inflated subprime mortgage bond ratings before the financial crisis, a person familiar with the talks said.
The ratings company deepened the 2008 economic collapse by giving top ratings to bad mortgage debt to win business from Wall Street banks, the government said. The U.S. had said it might seek as much as $5 billion when it sued S&P in 2013. The states and the District of Columbia also sued the McGraw Hill Financial Inc. unit.
New York-based S&P, the only credit rater sued by the Justice Department's residential mortgage-backed securities working group, contends that it was singled out because it downgraded U.S. debt in 2011. Its competitors, which issued the same grades for the same securities, weren't sued by the U.S. The case is scheduled for trial in September.
Representatives of S&P and the Justice Department didn't immediately comment. The person familiar with the talks didn't want to be identified because the negotiations are private.