S&P Says Lawsuit Is Feds' Revenge for Downgrade
Justice Department calls claim 'preposterous'
By Kevin Spak, Newser User
Posted Sep 4, 2013 10:17 AM CDT
This Oct. 9, 2011 file photo shows 55 Water Street, home of Standard & Poor's, in New York.   (AP Photo/Henny Ray Abrams, File)

(Newser) – Standard & Poor's is claiming that the Justice Department's massive lawsuit against it is simply "retaliation" for the rating agency's 2011 decision to downgrade the US credit rating. In a court filing yesterday, S&P argued that the downgrade was "free speech" and that hence "the retaliation, embodied in the commencement of this impermissibly selective, punitive, and meritless litigation, is unconstitutional." A Justice Department spokesman tells the Wall Street Journal that "the allegation is preposterous."

The very day after the Justice Department filed its $5 billion lawsuit, which alleges that S&P knowingly rated lousy mortgage-backed securities too highly, the DOJ publicly denied a link between the two. And while it's common for targeted companies to make such claims, one former federal prosecutor says he doubts it will help. "It's either fraud or it isn't," he says. Then again, it's only one of 19 defenses S&P outlined in the filing. Another targets Ben Bernanke and Henry Paulson, noting that they underestimated the coming financial crisis, too. S&P wants the lawsuit dismissed.

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Showing 3 of 11 comments
Lefty_Libby
Sep 5, 2013 6:04 PM CDT
S&P you defrauded the global economy and it's well past time you pay for your crimes. As to the other: It's not wise to mess with Uncle Sam. The downgrade costs U.S. taxpayers big time.
boxcar
Sep 5, 2013 1:05 AM CDT
The 1993 Solar Mortality Theory led solar scientists to predict an event would occur precisely on 2007.5 to TRIGGER the onset of global socio-economic upheavals. We now know what the "Event" was- The collusion of BOTH parties to foist mortgages onto unqualified buyers so bankers could hawk their bogus mortgaged back triple-A securities around the globe, then short them, betting on planned failure- On 7Jul07 (2007.5) the BUSH Adm SEC removed the 1937 Uptick Rule, one obstacle that prevented Wall Street Banksters from SHORTING the builtup housing bubble of bogus mortgage securities into the ditch. W/in 2 weeks of its removal Bear Stearns saw 2 major hedge funds (long on housing) TANK and US Wall Street banking system began to unravel- the rest R history: Bear Stearns, Lehman Brothers, Merrill Lynch Bush Millionaire cronies became Billionaires and Bush had audacity to have US Treasury BAIL OUT banks who held the SHORTS or "Toxic Assets", otherwise the FEDs would go Bankrupt taking US down. Romney musta' known of the "Game Plan" since he converted all stocks & bonds into CASH in 2007, the real reason he would not divulge his IRS statements for '07 & '08. RepubliCONs will say the Uptick Rule had nothing to do w/stk mkt crash- Bull Shit, it had EVERY THING to do with it- DUH Jim Cramer of Mad Money shouted "They know nothing" when he realized the safety net of the Uptick Rule had been removed and the stk mkt was in FREE FALL- Now he's strangely silent even tho NO ONE even speaks about reinstating the Uptick Rule- What R they waiting for? the other shoe to drop when commercial real estate mortgages made before Fall '08 crash have to be reset every 5yrs, like NOW, this Fall 2013. When local banks send appraisers out to strip malls, bus. bldgs to count vacancies, they'll find NO VALUE to reset mortgages to- Means a rash of local bank failures but no Bail Out this time around. Stk Mkt will go back to the 20yr shoulder of 1960s thru 1980s when it hovered around 1000. Like WWII it'll be GDII Remember we didn't know The Great War was WWI until WWII came along. Same goes for The Great Depression. The game is rigged, the fight is fixed, the dice are loaded and altho the ship is sinking the Captain lies. When the S&L debacle played out over 3000 corporate executives were indicted or prosecuted, but this time NO ONE has been charged for any wrong doing, instead they all received BONUSES to boot- Something's gravely wrong in our U$A and it can be summed up in one statement- "AMERICA" is a Big Corporate LIE
jgarbuz
Sep 4, 2013 9:41 PM CDT
Government policies to push home ownership on those with no visible means to repay home loans distorted the mortgage market. They distorted the traditional ways that banks and other lending agencies traditionally went about to ascertain the credit worthiness of borrowers, and this entire trend to bundling and securitization of mortgages. The government was the prime mover in the ultimate inevitable collapse.