The United States’ Department of Justice is now investigating the rating agency Standard & Poor’s according to the New York Times.

The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews. [...]

In the mortgage inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers, according to the people with knowledge of the interviews. If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns.

This should have happened over two years ago right after the economic meltdown but I guess late is better than never.

If this investigating leads to proof of fraud it could result in a flood of new lawsuits against S&P from corporations, pension funds, and local governments.

According to the report the investigating was launched before S&P downgraded the United States’ credit rating earlier this month. I personally won’t be surprised if one of the reasons S&P chose to rush out its report of the downgrade after spending just a few hours fixing a $2 trillion error discovered by the Treasury Department, was to make sure the downgrade happened before this investigation progressed farther. It would fit with S&P recent pattern of behavior.