Rich Cordray speaks out re: his latest lawsuit against those who ripped off Ohio's retirement systems

From John Curry, November 24, 2009

http://www.ohioattorneygeneral.gov/SpeakOutOhio/Blog/November-2009/Cordray--There-are-no-special-rules-for-those-in-t

Ohio Attorney General Richard Cordray

SpeakOutOhio > Blog > November 2009 >

Cordray: There are no special rules for those in the financial industry

11/20/2009

My office is aggressively pursuing Wall Street corporations and executives that harm investors here in Ohio and around the world. Just one week ago, we announced a $400 million settlement in our litigation against Marsh, the insurance broker whose kickback scheme resulted in tremendous investor losses.

Today we are opening a new front in our fight to hold Wall Street accountable. Our nation’s three largest rating agencies – Standard and Poor’s, Moody’s, and Fitch – carry an important duty to our marketplace and economy to offer objective information about the relative security of investments. And investors trust that information when making extremely important decisions. But unfortunately, the rating agencies recently shirked their responsibilities, sparking worldwide economic distress. Nowhere has this been felt more acutely than in Ohio.

Specifically, it has come to light that Standard and Poor’s, Moody’s, and Fitch offered inaccurate evaluations of financial products known as mortgage-backed securities. The rating agencies gave these investments their highest credit ratings. As it turns out, however, those ratings were artificially inflated – and Standard and Poor’s, Moody’s, and Fitch inflated the ratings in exchange, at least in part, for very lucrative fees from the issuers of these securities. And in fact, investments in mortgage-backed securities were nowhere near as safe as the rating agencies assured investors they would be.

In other words, the credit rating agencies sold out – and they sold us out. They traded in their objectivity, and in exchange, received massive profits. As a result, Ohio police officers, fire fighters, teachers, government workers, investors, and retirees suffered terrible losses – losses that, according to our preliminary analysis, exceed $457 million. We will hold Standard and Poor’s, Moody’s, and Fitch accountable for the havoc they wreaked in our economy and for the devastation they imposed on the hard-earned investments of ordinary workers, families, and retirees here in Ohio.

This case goes to the heart of what’s wrong with Wall Street today. Ohio workers – including our families, friends, and neighbors – work hard to create wealth in our economy. Then Wall Street corporations and executives manipulate that wealth, for their benefit, and they do so with total disregard for our life’s work and the importance of our retirement savings. Ordinary people throughout Ohio are hurt by this kind of misconduct. And we won’t stand for it.

As I’ve repeatedly said, there are no special rules for those in the financial industry. Wall Street corporations and executives must play by the same rules as everybody else, and we will make sure they do so.

This lawsuit brings to eight the number of major cases handled by my office against Wall Street this year. To date, we have succeeded in recovering $2 billion. I realize that Columbus, Ohio, may seem far away to executives on Wall Street, but I hope by now that they’re starting hear us. It is no longer safe to run roughshod over workers, retirees, and families in Ohio. If you break the law, and harm Ohio investors, you will be held accountable.