One of the failed banks, Riverside National Bank of Fort Pierce, Fla., brought a suit against Moody's and its two competitors, alleging that Moody's as a result of "undisclosed conflicts of interest fraudulently and/or negligently assigned inflated 'investment grade' ratings to the CDOs" that are worthless today. Riverside eventually failed and its toxic assets fell to the Federal Deposit Insurance Corp., which in an unusual move took over as the plaintiff and continued the suit. Moody's declined to comment.
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