The executive at Standard & Poor's was clear: "This market is a wildly spinning top which is going to end badly."
That sober assessment of certain mortgage-related investments, delivered to colleagues in a confidential memo in December 2006, is now part of a trove of internal e-mails and documents that have come to light in a federal suit against S&P, the nation's largest credit ratings agency.
The correspondence, made public in court documents late Monday, provide a glimpse at the inner workings of an institution that the Justice Department says fraudulently inflated credit ratings, with dire consequences for the entire economy. In a series of e-mails, tensions appeared to be escalating inside the firm's headquarters in Lower Manhattan as it publicly professed that its ratings were valid, even as the home loans bundled into mortgage-backed securities, or M.B.S., were failing at accelerating rates.
One comes from an S&P analyst in March 2007 borrowing from the Talking Heads song "Burning Down the House," creating new lyrics: "Subprime is boiling over. Bringing down the house." S&P said prosecutors cherry-picked e-mails and that it would vigorously defend itself from "these unwarranted claims."
In another 2007 e-mail, an analyst responds to a question about his new job: "Job's going great. Aside from the fact that the M.B.S. world is crashing, investors and the media hate us and we're all running around to save face … no complaints."
Together, the documents show a portrait of some executives pushing to water down the firm's rating models in the hope of preserving market share and profits, while others expressed deep concerns about the poor performance of the securities and what they saw as a lowering of standards.
The United States attorney general, Eric H. Holder Jr., joined by attorneys general from 16 states, unveiled the case on Tuesday in Washington, accusing S&P and its parent, the McGraw-Hill Companies, of intentionally propping up ratings of shaky mortgage investments and setting them up for a crash when the financial crisis struck.
The government is seeking $5 billion in penalties to cover losses to investors like state pension funds and federally insured banks and credit unions. The amount would be more than five times what S.& P. made in 2011.
"The action we announce today marks an important step forward in the administration's ongoing effort to investigate — and punish — the conduct that is believed to have continued to the worst economic crisis in recent history," Mr. Holder said.