Uncategorized

Standard & Poor’s Sued for Inflated Ratings That Caused Investors to Lose Billions

Published

13 years ago

February 7, 2013

Kamala Harris

Attorney General Kamala Harris this week filed a lawsuit against one of the nation’s major credit rating companies for inflating its ratings of structured finance investments, which caused California’s public pension funds and other investors to lose billions of dollars.
The complaint, filed Tuesday in San Francisco Superior Court, alleges that the McGraw-Hill Companies, Inc. and Standard and Poor’s Financial Services LLC violated the False Claims Act and other state laws by using a ratings process based on what senior executives described as “magic numbers” and “guesses.”
“For years, S&P placed its priority on maintaining its market share, instead of the investors who trusted in its supposedly objective ratings,” said Harris. “When the housing bubble burst, S&P’s house of cards collapsed, and California paid the price—in billions. S&P must be held accountable for its conduct that contributed to one of our country’s worst financial crises.”
Investors relied on S&P and its competitors to rate these securities because they had access to only general descriptions of the assets backing their investments, which often included mortgages. California’s public pension funds also relied on S&P because they are often required to buy securities that received a coveted “AAA” rating, signaling that the investment was top-tier and bore minimal risk.
The complaint alleges that, from 2004 to 2007, S&P systematically misrepresented to the public, and to CalPERS and CalSTRS, that its ratings of structured finance securities were based on an independent, objective and reliable analysis, and not influenced by S&P’s economic interests.
In doing so, S&P lowered its standards for rating securities to gain market share and increase profits, and violated the False Claims Act by making false statements about the nature and risk of investments. The complaint also describes the company’s efforts to suppress the development of new and more accurate ratings models.
In mid-2007, the housing bubble burst. After securities that S&P had deemed the least risky began defaulting, S&P downgraded many residential mortgage backed securities investments. The market collapsed, and of those securities issued in 2007, more than 90 percent were downgraded to junk status.
The California Public Employees Retirement System (PERS) and the California State Teachers Retirement System (STRS) – two of the nation’s largest institutional investors – lost approximately $1 billion.
Harris was joined Tuesday by the U.S. Department of Justice and 12 other states and the District of Columbia in announcing lawsuits in Washington, D.C. The other lawsuits allege violations of the federal Financial Institutions Reform, Recovery and Enforcement Act and state unfair competition laws.
However, California’s suit is unique because it is being filed not only under California’s unfair competition laws but also under the state’s False Claims Act. This suit includes a claim for triple damages – because when the state makes a purchase based on a false statement, the defendant is responsible for the amount lost times three.

Oakland Post

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Uncategorized

Oakland Housing and Community Development Department Awards $80.5 Million to Affordable Housing Developments

Published

7 months ago

June 17, 2025

Oakland Post

Special to The Post

The City of Oakland’s Housing and Community Development Department (Oakland HCD) announced its awardees for the 2024-2025 New Construction of Multifamily Affordable Housing Notice of Funding Availability (New Construction NOFA) today Five permanently affordable housing developments received awards out of 24 applications received by the Department, with award amounts ranging from $7 million to $28 million.

In a statement released on Jan. 16, Oakland’s HCD stated, “Five New Construction Multifamily Affordable Housing Development projects awarded a total of $80.5 million to develop 583 affordable rental homes throughout Oakland. Awardees will leverage the City’s investments to apply for funding from the state and private entities.”

In December, the office of Rebecca Kaplan, interim District 2 City Councilmember, worked with HCD to allocate an additional $10 Million from Measure U to the funding pool. The legislation also readopted various capital improvement projects including street paving and upgrades to public facilities.

The following Oakland affordable housing developments have been awarded in the current round:

Mandela Station Affordable

238 Affordable Units including 60 dedicated for Homeless/Special Needs
Award: $15 million + previously awarded $18 million
Developer: Mandela Station LP (Pacific West Communities, Inc. and Strategic Urban Development Alliance, LLC)
City Council District: 3
Address: 1451 7th St.

Liberation Park Residences

118 Affordable Units including 30 dedicated for Homeless/Special Needs
Award: $28 million
Developer: Eden Housing and Black Cultural Zone
City Council District: 6
Address: 7101 Foothill Blvd.

34th & San Pablo

59 Affordable Units including 30 dedicated for Homeless/Special Needs
Award: $7 million
Developer: 34SP Development LP (EBALDC)
City Council District: 3
Address: 3419-3431 San Pablo Ave.

The Eliza

96 Affordable Units including 20 dedicated for Homeless/Special Needs
Award: $20 million
Developer: Mercy Housing California
City Council District: 3
Address: 2125 Telegraph Ave.

3135 San Pablo

72 Affordable Units including 36 dedicated for Homeless/Special Needs
Award: $10.5 million
Developer: SAHA and St. Mary’s Center
City Council District: 3
Address: 3515 San Pablo Ave.

The source of this story is the media reltations office of District 2 City Councilmember Rebecca Kaplan.

Oakland Post

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Activism

Oakland Housing and Community Development Department Awards $80.5 Million to Affordable Housing Developments

Published

12 months ago

January 30, 2025

Oakland Post

Rebecca Kaplan, interim District 2 city councilmember. File photo.

Special to The Post

The following Oakland affordable housing developments have been awarded in the current round:

Mandela Station Affordable

238 Affordable Units including 60 dedicated for Homeless/Special Needs
Award: $15 million + previously awarded $18 million
Developer: Mandela Station LP (Pacific West Communities, Inc. and Strategic Urban Development Alliance, LLC)
City Council District: 3
Address: 1451 7th St.

Liberation Park Residences

118 Affordable Units including 30 dedicated for Homeless/Special Needs
Award: $28 million
Developer: Eden Housing and Black Cultural Zone
City Council District: 6
Address: 7101 Foothill Blvd.

34th & San Pablo

59 Affordable Units including 30 dedicated for Homeless/Special Needs
Award: $7 million
Developer: 34SP Development LP (EBALDC)
City Council District: 3
Address: 3419-3431 San Pablo Ave.

The Eliza

96 Affordable Units, including 20 dedicated for Homeless/Special Needs
Award: $20 million
Developer: Mercy Housing California
City Council District: 3
Address: 2125 Telegraph Ave.

3135 San Pablo

72 Affordable Units including 36 dedicated for Homeless/Special Needs
Award: $10.5 million
Developer: SAHA and St. Mary’s Center
City Council District: 3
Address: 3515 San Pablo Ave.

The source of this story is media reltations office of District 2 City Councilmember Rebecca Kaplan.

Oakland Post

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Alameda County

Oakland Acquisition Company’s Acquisition of County’s Interest in Coliseum Property on the Verge of Completion

The Board of Supervisors is committed to closing the deal expeditiously, and County staff have worked tirelessly to move the deal forward on mutually agreeable terms. The parties are down to the final details and, with the cooperation of OAC and Coliseum Way Partners, LLC, the Board will take a public vote at an upcoming meeting to seal this transaction.

Published

1 year ago

January 11, 2025

Oakland Post

Alameda County Board of Supervisors Chairman David Haubert. Official photo.

Special to The Post

The County of Alameda announced this week that a deal allowing the Oakland Acquisition Company, LLC, (“OAC”) to acquire the County’s 50% undivided interest in the Oakland- Alameda County Coliseum complex is in the final stages of completion.

Oakland has already finalized a purchase and sale agreement with OAC for its interest in the property. OAC’s acquisition of the County’s property interest will achieve two longstanding goals of the County:

The Oakland-Alameda Coliseum complex will finally be under the control of a sole owner with capacity to make unilateral decisions regarding the property; and
The County will be out of the sports and entertainment business, free to focus and rededicate resources to its core safety net

In an October 2024 press release from the City of Oakland, the former Oakland mayor described the sale of its 50% interest in the property as an “historic achievement” stating that the transaction will “continue to pay dividends for generations to come.”

The Board of Supervisors is pleased to facilitate single-entity ownership of this property uniquely centered in a corridor of East Oakland that has amazing potential.

“The County is committed to bringing its negotiations with OAC to a close,” said Board President David Haubert.