From the Cincinnati Enquirer:
The securities then plummeted in value as the housing market nose-dived over the past few years. Cordray alleges in the lawsuit that the agencies slapped the high rating on securities in return for high fees paid by those they were rating.
Attorney General Cordray filed the suit Friday in U.S. District Court in Ohio. He said that Standard & Poor's, Moody's Investors Service, and Fitch Ratings assured the pension funds that mortgage-backed securities had the highest ratings and lowest risk.
Ohio's attorney general has sued the three credit ratings agencies alleging that they gave unjustifiably high ratings to mortgage-backed securities that lost at least $457 million for five Ohio public pension funds.
Reason.com looked at the role of rating agencies and how subtle regulatory changes in the pursuit of higher home-ownership rates created "an expert-induced bubble." It's nauseating reading.