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Calpers is taking on the credit agencies - and it's about time someone did.

In the biggest challenge yet to Moody's ( MCO), Fitch and McGraw Hill's ( MHP) Standard & Poor's unit, the biggest U.S. public pension fund filed a lawsuit in California putting the blame on the ratings agencies for $1 billion in losses, according to the New York Times.

Many have complained that the credit ratings agencies were complicit in the credit crisis because they slapped their top ratings onto just about every type of wild investment package concocted by various hedge funds, banks and financial companies. No one has been able to prove it so far.

These investment packages bundled all kinds of questionable assets including subprime mortgages, the high-risk housing loans that lenders like Bank of America's ( BAC) Countrywide unit, Citigroup ( C) and others handed out willy-nilly during the housing boom.

Yes, we're talking about the same loans that later contributed to record foreclosures across the country and contributed to the global financial crisis.

Calpers, aka the California Public Employees Retirement System, says the rating agencies were "wildly inaccurate" and "made negligent misrepresentations" in their assessment of these new-fangled securities, according to the Times, and -- even more damning -- that the entire model is fraught with conflict of interest because the agencies are paid to provide ratings by the very same companies issuing the investment packages, according to the Times.

Sure, we've heard this all before (check out TheStreet.com's Who's to Blame series from March).

But nothing happened. It looked like the ratings agencies were going to be let off the hook. Until now.

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