NEW YORK — Moody’s Corp. has agreed to pay nearly $864 million to settle federal and state claims it gave inflated ratings to risky mortgage investments in the years leading up to the financial crisis.
The deal announced Friday was struck among the New York-based rating agency, the Justice Department and the attorneys general for 21 states and the District of Columbia.
Moody’s — along with the other two major rating agencies, Standard & Poor’s and Fitch — were widely criticized for giving low-risk ratings to risky mortgage securities, while reaping lucrative fees.
The system spread the risk of mortgage defaults to banks around the globe and led to a string of financial collapses in 2008. Moody’s acknowledged that it used a more lenient standard for certain financial products and didn’t make public the differences from its published standards.
