Feds File Suit Against Agency That Downgraded US Credit Rating

Standard-and-Poors

Last year Standard & Poor made headlines by downgrading the US credit limit. The Obama administration wasn’t happy, and now the federal government is suing claiming that the company didn’t property rate mortgage bonds during the subprime housing loan bubble:

WASHINGTON (TheBlaze/AP) — The U.S. government is accusing the debt rating agency Standard & Poor’s of fraud for giving high ratings to risky mortgage bonds that helped bring about the financial crisis.

The government filed a civil complaint late Monday against S&P, the first enforcement action the government has taken against a major rating agency related to the financial crisis.

S&P, a unit of New York-based McGraw-Hill Cos., has denied wrongdoing. It says the government also failed to predict the subprime mortgage crisis.

S&P may have a point. Anyone else remember politicians like Rep. Barney Frank denying the existence of the housing bubble?

Did S&P rate subprime mortgage bonds inappropriately? Maybe, but that’s a bit like blaming a car company for drunk driving crashes. The federal government was in the driver’s seat on the subprime mortgage market. They were the ones pushing lenders to make those loans. They were the ones using government sponsored entities like Fannie Mae and Freddie Mac to buy up the subprime loans.

The housing bubble happened because of government policies, not banking greed.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • RandyBoBandy

    When your policies and leadership are failing, always resort to bullying someone legally. Just make sure that the taxpayers are footing the bill for your lawyers.

  • mickey_moussaoui

    Democrat strawman alert.
    The Democrat configured housing bubble scam created the global economy crash. Obamacare will be the straw that breaks the back of America’s remaining economy.
    We’ll all be eating beans from a can soon enough.

  • WOOF

    Mortgage FRAUD was facilitated by mortgage brokers,
    aided by banksters, abetted and sworn rated AAA by S&P,
    without or in spite of due diligence.

  • BoydB

    No one was more to blame for the housing bubble than the rating agencies. The government ushered in the bubble with loan guarantees, but we should expect the gov. to skew the market, its what they do. The rating agencies, Fitch, S&P , Moody’s, and other smaller ones, have a sworn and fiduciary duty to examine bonds and rate them accordingly. All they did was rate them as the bond issuers who paid them wanted, overinflating them. This misled all sorts of investors into buying them, and the snowball rolled on downhill. They need to be spanked by, unfortunately, the Justice Dept.

  • Snarkie

    It’s not a question about failing to predict something or a retaliatory suit from the admin, as you seem to imply. It’s a question of a private credit agency, with conflicts of interest, lying to the public about the risk involved in the different private entities it rates.

  • $8194357

    What an elitist international olagarchy “farce”.
    Can you say “crony capitalist debt ponzi” boys and girls?
    Marxist/Lenninist Illuminati in origin, huh…

    http://www.augustforecast.com/2013/02/06/findings-forecasts-02062013/

    Monopoly Banking

    The Fed­eral Reserve has run out of ammu­ni­tion. For all the money that the Fed has thrown into our finan­cial system, the economy actu­ally shrunk in the fourth quarter of 2012. Unem­ploy­ment is also ticking up again.

    Con­trary to pop­ular belief, the Fed does not have absolute con­trol over interest rates. It often acts in hind­sight, adjusting its internal rates to market forces, and such has been the case during the long term bear market in interest rates. What the Fed does do, how­ever, is dis­lo­cate free mar­kets in order to pro­vide pri­vate money-making oppor­tu­ni­ties to its members.

    This is seen in recent years by the blow-up of the sub-prime mort­gage industry and the mul­ti­tril­lion dollar bailout of large finan­cial insti­tu­tions. If the Fed had been absent during this period, these things never would have happened.

    The Fed’s actual agenda has been to pro­tect its pri­mary con­stituents – the large U.S. and global banks. It’s feigned atten­tion to the Amer­ican economy, workers and cit­i­zens is a phony as a three-dollar bill. The largest U.S. banks, all of which hold shares in the Fed include,

    JP Morgan Chase

    Bank of America

    Cit­i­group

    Wells Fargo

    Goldman Sachs

    Morgan Stanley

    How do you sup­pose they got to be the largest banks in the country?
    By free-market com­pe­ti­tion?
    Hardly.

    John D. Rock­e­feller, the early patri­arch of the Rock­e­feller for­tune and founder of Stan­dard Oil, was an unabashed monop­o­list who famously stated, “Com­pe­ti­tion is a sin.”

    The Rock­e­feller family has con­trolled the Chase-related line of banking since the 1920′s. When Chase Bank merged with Equi­table Trust (John D. Rock­e­feller, Jr. was the largest share­holder) in 1930, it became the largest bank in the world. It is STILL the largest bank in the U.S. and the ninth largest in the world!

    The essence of monopoly cap­i­talism is to always game the system in their favor while dis­crim­i­nating against com­peti­tors.

    These banks, and espe­cially JPMor­gan­Chase have turned gov­ern­ment manip­u­la­tion into an art form. Communist/Marxist Lenin was the first person to define “state monopoly cap­i­talism” as the suc­cessor to simple monopoly cap­i­talism. According to Marxist theory, state monopoly cap­i­talism is the final his­tor­ical stage of capitalism.

    Per­haps this is why the global banks and cor­po­ra­tions are pushing so hard for a new eco­nomic model that they them­selves call a “green economy.” Under the cover of green lies Tech­noc­racy, which I have written about for sev­eral years now.

  • http://ndgoon.blogspot.com Goon

    I think the circus clown Barney Frank should share a big share of the blame.

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