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Obama’s Justice Dept Probing S&P Ratings

From the New York Times:

U.S. Inquiry Eyes S.&P. Ratings of Mortgages

By LOUISE STORY
August 17, 2011

The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.

Isn’t this a little ironic? Who has caused more mortgages to be overrated than the federal government?

The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it is likely to add fuel to the political firestorm that has surrounded that action.

Sure it did. But even if this is so, S&P had been threatening to downgrade the US credit rating for quite some time. This is also known as ‘asking for it.’

Lawmakers and some administration officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.

Oh, our sides! This from the most secretive and incompetent administration in our nation’s history.

In the mortgage inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers, according to the people with knowledge of the interviews.

Sorry, but isn’t this what the government has demanded from banks for years? Why do we have a Community Reinvestment Act, if not to force banks to rate mortgages higher than they should be rated?

If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns.

Maybe S&P could claim they were doing this with honorable intentions. They were just trying to buy votes.

It is unclear if the Justice Department investigation involves the other two ratings agencies, Moody’s and Fitch, or only S.& P.

In other words, if Moody and Fitch downgrade Mr. Obama, they will get the same treatment. They have been warned

During the boom years, S.& P. and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.

Unlike Congress who were overseeing the housing market. (Cf. Barney Frank.)

Since the crisis, the agencies’ business practices and models have been criticized from many corners, including in Congressional hearings and reports that have raised questions about whether independent analysis was corrupted by the drive for profits…

Are we to assume that Fannie Mae and Freddie Mac are being investigated by ‘Holder’s People,’ too? (Just kidding.)

The government has brought relatively few cases against large financial concerns for their roles in the housing blowup, and it has closed investigations into Washington Mutual and Countrywide, among others, without taking action

After all, these companies had a history of giving generously to the Democrat Party.

A successful case or settlement against a giant like S.& P. could accelerate the shift away from the traditional ratings system. The financial reform overhaul known as Dodd-Frank sought to decrease the emphasis on ratings in the way banks and mutual funds invest their assets. But bank regulators have been slow to spell out how that would work

Yes, things must change. But the regulators won’t say how. But don’t worry, banks. The feds will tell you where you have gone wrong when it is convenient for them. Just watch your step. And be careful to toe the party line. Unless you want to get into trouble like S&P.

Meanwhile, we have this from Reuters:

S&P: confident France to maintain AAA, stable outlook

August 18, 2011

PARIS (Reuters) – Standard & Poor’s head of France said on Thursday that the agency was confident of maintaining France’s AAA credit rating unchanged with a stable outlook.

"We are confident in this stable AAA rating," Carole Sirou told RTL radio, adding that the grade was not dependent on specific budgetary commitments but a "trajectory, a commitment."

Isn’t it funny how France has retained their triple A rating? Even after that crazy man Nicolas Sarkozy has demanded they adopt a balanced budget amendment.

Still, why couldn’t our country make a commitment like that?

This article was posted by Steve on Thursday, August 18th, 2011. Comments are currently closed.

18 Responses to “Obama’s Justice Dept Probing S&P Ratings”

  1. GetBackJack says:

    1986 – I’m Senior Managing Partner in a boutique investment bank. One of our subsidiaries was a residential mortgage servicing unit; another was a residential mortgage wholesaler; and a residential mortgage brokerage network.

    As the Savings and Loan manufactured debacle unfolded and people I knew in the world of paper and assets were screaming in fury at the federal government, the rank manipulation of an entire segment of our national economy and the radicalized rewrite of how consumer lending at all levels was going to crammed down the throats of lenders, requiring them to become nothing more than “on-the-hook” storefronts for the Federal Reserve system and it’s crony banks, I urged my two partners to unload our residential subsidiaries as quickly as possible.

    We were old school. Real underwriting. In fifteen years the company I bought into had only six loans ever called out for fraud …. six out of tens of thousands of loans; six out of tens of thousands of broker representatives and Lord knows how many loans our sub serviced. Six.

    I predicted that if the Fed and the Finance Chairs of the Senate and House got their way we’d be awash in fake paper, troubled paper, fraudulent paper and required to employ Equal Opportunity underwriters and brokers. And that all the bad stuff would roll downhill onto us, and the real guilty would be immune.

    I was right to such a degree I shudder to think what kind a shocking disaster would have been my fate if I hadn’t convinced my reluctant partners to get out. We did, a barely break even deal they castigated me for, but when it all went down the tubes, I looked like the Oracle at Delphi.

    As to S&P, let me say this …. (1) hardly shocks me that the company that took Obama and Congress to the woodshed would get the same treatment Joe the Plumber received. The wonder of it is that our Equal Opportunity President didn’t order up a National Security Finding and send in a Seal team to execute his enemies (who were dead in a cave nine years ago). (2) Following the ENRON shocker, when it came to light even the most estimable honorable old line CPA firm in the world, Arthur Anderson not only got bought, but bought in a way that would make whores in Barcelona cry “Rookies!” I have zero trust in our institutions and know with 100% certainty that total corruption lies behind nearly every door. (3) The Democrats wouldn’t shove this out into the news-cycles if they hadn’t already developed a damning storyline and talking points and had it on the shelf waiting to deploy.

    Which, in the real world, tells me Moodys is a pack of Leftist trolls working for The Man.

    Since they’re getting away unnoticed and scot-free.

    Surely you remember how to box? Watch my left watch my left watch my left hand …..

    • xdannyh says:

      GBJ: thanks for the insight. In 06 and07 I asked all who would care….Who is buying these mortgages??? As it was obvious that no individual investor would buy a zero collateral instrument, or an obvious “liar loan”. Nobody seemed to know…I knew it couldn’t be Freddy or Fanny, the rules were too tight….(wrong) but they weren’t the major buyers it was the invest banks and their CDO’s. Which at the time, nobody knew a damned thing about. As it turned out it was the “guberment” demanding that these loans be made. So instruments were devised to do so. All well and good, but here is the rub: the instruments were all rated AAA by S&P, Moodys, et al in obvious conflict with the facts….So in my mind it is hard to “feel” for S&P because someone should be in jail. And it is absolutely in-excusable that there has been none.
      So that is one thing and I don’t want it to conflict with the above news article, which goes on to explain, let me be clear on this, that the “Shakedown” of the S&P is being conducted by the biggest and best Chicago shakedown mob of Reverands, democrats, racial and radical groups, and “community organizers” on the planet. “You’ve been warned!”

    • GetBackJack says:

      It’s like watching sausage being made. When your job is keeping a finger in the wind for the slightest shift in currents, because your money is every day on the line, you ought to develop a cunning sensitivity to undercurrents of change.

      After being neck deep in the S&L ginned up crisis, and then being treated like Joe Dirt during the period of the Resolution Trust redistribution of national assets, I was pretty damn sure we were in for a gang rape fiscally like never seen before.

      I was right.

      Being in the kitchen, you see chefs and servers do things customers never see.

    • proreason says:

      Fascism doesn’t require firearms.

  2. Natural Born Citizen says:

    What is troubling to me is this administrations Justice dept does not even seem to care about any attempt to appear impartial. When the AG thinks he can just stonewall and lie about operation Gunrunner with impunity, and won’t even touch the recent flash mobs, (hate crimes) any concept of our Justice department being impartial is a joke. This whole administration is a blight on our ideals of justice being blind.

    • JohnMG says:

      NBC, you must be a racist, or sumpin’. Eric Holder a crook?

      Ya think!!??

    • Natural Born Citizen says:

      JohnMG,
      Eric Holder is not just a crook he is a liar, a traitor, and a coward. (Just like his boss!) If that makes me a racist so be it (I am prejudiced against tyrants!) By the way thank you for your service to your country.

    • JohnMG says:

      OUR country, NBC. By the way, that’s the way I now refer to myself……as a racist. I smirk at my liberal acquaintances when I say it, too. It leaves them with nothing else to say and points to just how stupid such an accusation is. It also proves that liberalism is a mental disorder, and like Jack Nicholson (himself a pompous asshole) says; “…..you can’t handle the truth!”

  3. Flession says:

    The Chicago Way, ladies and gents.

  4. River0 says:

    This is how we know we’re under the reign of the Anti-Christ: Everyone who speaks the truth – no matter where they reside on the globe – can be silenced at any time, and by any means necessary. All in the name of “peace”, “security”, “racial harmony”, or whatever other cover story is needed.

  5. BigOil says:

    Borrowing a popular chant from our liberal friends – “this is what tyranny looks like….this is what tyrrrranny looks like”.

  6. Rusty Shackleford says:

    More and more this president acts like a dictator–and gets away with it!

    He has admitted he does not embrace the cumbersome methodology of our constitutional republic, he hates it.

    http://nation.foxnews.com/culture/2011/04/11/obama-complains-schoolchildren-about-his-job

    The fact that he whined to schoolchildren about his job pretty much declares his own immaturity and petulance.

    Some say he’s not that smart, some say he’s a clever strategist on how to bring down the US system. I say he’s an idiot who has a hate-filled gut and who has appointed people who can do these things for him. His own personal affectation is to make public appearances and be “Mussolini-esque” (Chin out, arrogant, pompous). If he was intelligent, nay, wise he would properly negotiate with people and cleverly win the upper hand. He doesn’t do things that way. He has the tools of the media and other left-wing apparatchiks to go out and beat the tempo of how to destroy his opposition. This is nothing new; It’s just been turned up to 11. Is it because he’s black? Partly. It’s also because he’s such an utter boob that the left cannot handle it either. Not that they care all that much. They know the difference as to what happens in the news when Bush can’t say a word right vs. O-dumbass’s “57 states” and the like. They run cover.

    Lies of omission are still lies.

    He, Obama, probably does have a “vision” of the America he’d like to see where all the black people are in positions of authority and the whites are the garbagemen, ditch-diggers and the like. But, for those who have trumpeted the greatness of our “first black president” I will respond with this: Show me any nation that has had a black president that is doing well. Anyone? Anyone? Bueller? Nairobi, Zimbabwe, Nigeria, yeah…all bastions of equal opportunity and fairness, right? In fact, native black tribes there are continually pitted against one another constantly.

    I realize that the disparity between our system and those of the nations to which I refer, but think for a minute, why does having a black president mean that the level of the seas will fall and all will be right with the world?

    Well, on that I have to declare that, over many generations, the thought process of Americans has been warped to believe that government is the answer to problem-solving. If you’re poor, you turn to the government. If you can’t get clean needles to support your filthy habit, you turn to the government. If your kids want sex, they hand out free condoms at school. And on and on. As Reagan said, “Government is the problem. The second an administration steps in to “fix” anything, it will get worse. It’s as stringent a law as the fact that nothing can go faster than the speed of light. More stringent, in fact as some physicists are now seeing that some things may be able to exceed that speed limit.

    I submit that our system has been warped and bastardized into something that doesn’t even resemble what the fine men envisioned in 1776. This, much to the delight of the national socialists. They love complex, involved, difficult-to-follow rules and regulations. That way the “right” people can interpret them in their favor.

    But for me, I just turned 50 and I am ashamed at what politicians and selfish do-gooders have done to our system. Green this, save-the-whales that. No child left behind (without some of my money), give-aways…the great American Government Yard Sale. Hell, it’s not even a yard sale, it’s a complete lollapalooza of free stuff. How to get votes by giving taxpayer money to the people who neither deserve it nor work for it. How is this right?

    Only in the sick, twisted imaginings of a national socialist is this “right”. For everyone else who works and believes the money they earn should be theirs, well….you are now officially an enemy of the state.

    • River0 says:

      This is a replay of what happened to the Roman Republic. Mark Antony, Brutus, and others whipped up the mob by screaming “share the wealth” entitlement slogans, and then murdered Julius Caesar. A civil war erupted that rocketed Caesar’s nephew Octavian to power, and he hunted down all the assassins.

      The final sea battle at Actium secured Octavian and the Julian dynasty. Mark Antony and his hot squeeze Cleopatra committed suicide. Thus, the Roman Empire was born, and the Republic buried.

      If we’re lucky, we’ll come out of this intact. But I fear our republic is already lost. We’re being ruled by tyranny now. Maybe we’ll at least end up with a competent emperor and a strong empire?

    • Rusty Shackleford says:

      Oddly, Constantine moved it all to the former Byzantium, which of course became Constantinople, founded primarily on free trade and *gasp* commerce with a huge amount of shipping going right through the area. On the other side of the coin, however, there were some taxes for just being there and whatever goods or wares you had to sell/transport.

      But from 400AD to ~1100AD, Constantinople was the new Roman capital and it exploded with capitalism. Imagine that.

      The tyrannical types in old Rome pretty much felt it was better to just tax the snot out of people and ….presumably, many of the people fled just to avoid the taxman. Business, commerce and once prosperous free traders suffered as a result of the crippling levies and taxes troweled onto the citizens just to support the hedonistic lifestyles of the elites. Rome didn’t fall in one loud crescendo, it kind of crumbled away slowly. Yeah, like we’re doing now as a nation. They ran out of other people’s money.

    • River0 says:

      How did they ever do it without an EPA, Department of Energy, Department of Labor, Department of Education, OSHA, FDA, Bureau of Alcohol, Tobacco, and Crossbows, Federal Reserve, or Diversity Czar?

    • Rusty Shackleford says:

      To address that point, they did it at the point of a sword. The soldiers were kept paid but when the elites really had trouble having to deal with the extortion, it backfired on them at the ultimate end.

      Some say that the basis of the Cosa Nostra, the Mafia, has its strongest roots in the methodology employed by the Roman Empire. I can see that, as well as make a case for “genetic memory”. Not that I’m going there but I have to admit, it intrigues me.

      As Proreason has said, “Fascism doesn’t require firearms”. It’s done on the down-low. It’s an exercise, not of the arm, but of the mind and when everyone is convinced they’ll all “get some” from the kitty, they have a hard time believing otherwise.

    • tranquil.night says:

      “All this was inspired by the principle – which is quite true in itself – that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie… It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.”

      – Mein Kampf
      http://www.jewishvirtuallibrary.org/jsource/Holocaust/hitlerlie.html

  7. sticks says:

    Got an email from a friend that pretty much says it all. ” Abou the time our original thirteen states states adopted their new constitution in 1787, Alexander Tyler, a Scottish history professor at the University of Edinbugh had this to say…” ” A democracy is always temporary in nature; it simply cannot exist as a permanent form of government.A democracy will continue to exist up untill the time that voters discover they can vote themselves generous gifts from the public treasury.” “From that moment on , the majority always vote for the candidates who promise the most benefits from the tressury, with the result that every democracy will finally colapse due to loose fiscal policy, whic is always followed by dictatorship.” ” The average age of the worlds greatest civilizations from the beginning of history has been about 200 years. During those 200 years, those nations always progressed through the following sequence:
    1. From bondage to spiritual faith;
    2. From spiritual faith to great courage;
    3. From courage to liberty;
    4. From liberty to abundance
    5. From abundance to complacency;
    6 From complancency to apathy;
    7. From apathy to dependance;
    8. From dependance to bondage.”
    I’m not sure about all the particulars of this and don’t have the time to look them up right now, but the basic idea sounds about right.It’s probably the reason so many big government people want to grant amnesty to all the illegals, more votes for the promise of money out of the till. Also I am well aware that our founding fathers did not want or seek to set up a democracy, but a constituional republic, yet all we hear about these days is democracy this democracy that. I wonder why?


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