Sex-abuse scandal just got costlier for Penn State
The Times' Walter Hamilton is reporting that the Jerry Sandusky sex-abuse allegations at Penn State could prove costly.
Here's a bit of what Hamilton had to report on the Money & Company blog:
Moody's Investors Service announced Friday that it may downgrade the university's credit rating in light of the lawsuits and other "reputational and financial risk" the school is likely to endure. The shocking allegations of abuse may scare away prospective students and anger deep-pocketed alumni who make large donations to the football powerhouse.
"While the full impact of these increased risks will only unfold over a period of years, we will also assess the degree of near and medium term risks to determine whether to downgrade the current Aa1 rating," Moody's said in a news release.
One risk is that Penn State's insurers may balk at footing the bill for settlements with victims. They potentially could argue that top school officials, including its now-exiled president, Graham Spanier, were aware for years of the abuses allegedly committed by the football team's former assistant coach, Jerry Sandusky, but took no action.
How bad will the fallout be at Penn State? Legendary former coach Joe Paterno, fired on Wednesday, has hired a criminal defense attorney for possible representation in civil suits.
Photo: Joe Paterno, who earlier this season became the winningest Division I coach in college football with 409 victories, patrols the sideline during a game in 2003. Credit: Phelan Ebenhack / Associated Press