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Obama To Sue S&P Over Ratings (AKA Revenge)

From Reuters:

S&P expects U.S. lawsuit over pre-crisis credit ratings

By Aruna Viswanatha and Jonathan Stempel | February 4, 2013

(Reuters) – Standard & Poor’s said it expects to be the target of a U.S. Department of Justice civil lawsuit over its mortgage bond ratings, the first federal enforcement action against a credit rating agency over alleged illegal behavior tied to the recent financial crisis.

This is a disgrace, and yet another sign that we are becoming a banana republic. — Without even the bananas. This lawsuit is wrong in any number of ways.

First, S&P are being punished for trying to protect themselves from the toxic loans the government forced on them. Second, they are the only ones being sued, even though the other credit ratings agencies did exactly the same thing. (Oddly enough, Warren Buffet is a major shareholder in Moody’s.)

Lastly, it sure seems like S&P is being singled out for having downgraded the US credit rating back in April of 2011.

Shares of McGraw-Hill Cos, the parent of S&P, plunged 13.8 percent on Monday after news of the pending lawsuit surfaced, their biggest one-day percentage decline since the 1987 stock market crash, according to Reuters data.

The administration probably hoped to break S&P’s back. After all, S&P had the nerve to downgrade the US government’s credit rating. Which everyone knows is ‘sterling.’

An announcement of a lawsuit is expected on Tuesday, a person familiar with the matter said…

It is unclear why regulators may be now focusing on S&P rather than Moody’s or Fimalac SA’s Fitch Ratings.

Sure it is.

S&P, Moody’s and Fitch have long faced criticism from investors, politicians and regulators for assigning high ratings to thousands of subprime and other mortgage securities that quickly turned sour…

But we never heard about this criticism until after they downgraded the US credit rating, over the Obama administration’s strenuous objections.

Loans that were forced upon the banks by the government. Speaking of which, how have Fannie Mae and Freddie Mac ever been punished for pushing these loans and pretending they were good loans?

And we know why they haven’t been punished. Because they 1) give generously to the Democrat Party, and 2) are a place where Democrat politicians and their cronies go to get lucrative no show jobs.

The New York Times reported that talks between the Justice Department and S&P broke down last week after the government sought a settlement of more than $1 billion…

Another government shakedown. Just like the way they have shaken down so many of the banks that gave out these loans at the point of the government’s gun. Which is driving a lot of them to get out of the mortgage business altogether.

In a variety of lawsuits brought by investors, S&P has maintained that its ratings constitute opinions protected by the free speech clause of the U.S. Constitution…

Sadly, they will soon learn that the Constitution is no protection from Obama’s Justice Department.

This article was posted by Steve on Tuesday, February 5th, 2013. Comments are currently closed.

One Response to “Obama To Sue S&P Over Ratings (AKA Revenge)”

  1. Petronius says:

    S&P and the other rating agencies were preparing to issue another downgrade of the US credit rating sometime this spring.

    The government’s lawsuit is a shot across the bow, as well as pay-back for the last downgrade.

    And your taxes will pay for this lawsuit. While McGraw-Hill’s stockholders will incur billions in legal fees to defend their company.

    McGraw-Hill stock has dropped another 6% this morning, following the 13.8% drop on Monday.

    But perhaps they should be thankful the regime didn’t take them out with a drone strike.

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