Why Aren't We Prosecuting Singing S&P Fraudsters?

William Greider wonders if this is Obama's Watergate

By Kevin Spak,  Newser Staff

Posted Feb 6, 2013 1:31 PM CST

(Newser) – The Justice Department's lawsuit against Standard and Poor's looks pretty damning. According to the suit, S&P knew its ratings on mortgage bonds were too loose, proposed upgrading them in 2004—and then decided not to because it would hurt the bottom line, Fortune explains. The suit makes S&P look like a "villain" in the financial crisis, fully aware of the damage it was doing, writes Stephen Gandel. At one point in 2007, an analyst sent an internal email with a parody of the Talking Heads' Burning Down the House. Sample lyric: "Subprime is boi-ling o-ver, Bringing down the house." The analyst offered to sing it at colleagues' cubicles. Some reactions:

  • S&P's behavior sounds awfully criminal to William Greider at the Nation, which raises that gnawing, persistent question: Why hasn't anyone been arrested? The lack of financial crisis prosecutions "has become a momentous black mark on the Obama presidency, like a blood stain that cannot be washed away," Greider writes. It's a little like Watergate, which "unfolded gradually, drip by drip, long after Richard Nixon had won his reelection landslide."
  • Meanwhile, a Wall Street Journal editorial wonders whether the lawsuit is blatant retaliation for S&P's decision to downgrade the US' sovereign credit rating. It also points out that the SEC still forces institutions to rely on credit ratings from S&P, Moody's, and Fitch. "As a modest first step before suing a company for $5 billion, shouldn't the government at least stop mandating its products?"

This Oct. 9, 2011 file photo shows 55 Water Street, home of Standard & Poor's, in New York.
This Oct. 9, 2011 file photo shows 55 Water Street, home of Standard & Poor's, in New York.   (AP Photo/Henny Ray Abrams, File)
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