Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

S&P says U.S. to file civil lawsuit over ratings
Reuters ^ | February 4, 2013 | Staff

Posted on 02/04/2013 1:21:35 PM PST by LucianOfSamasota

(Reuters) - Standard & Poor's on Monday said it expects to be the target of a U.S. Department of Justice civil lawsuit over its ratings of mortgage bonds prior to the recent financial crisis.

The lawsuit against the McGraw-Hill Cos (MHP.N) unit focuses on its ratings in 2007 of various U.S. collateralized debt obligations (CDO), S&P said.

It would be the first federal enforcement action against a credit rating agency over alleged illegal behavior tied to the financial crisis.

"A DOJ lawsuit would be entirely without factual or legal merit," S&P said in a statement. "The DOJ would be wrong in contending that S&P ratings were motivated by commercial considerations and not issued in good faith."

The Justice Department was not immediately available for comment.

Several state attorneys general are expected to join the case, The Wall Street Journal said, citing people familiar with the matter. The expected charges follow the breakdown of talks between the department and S&P, the newspaper said, citing the people.

In afternoon trading, McGraw-Hill shares were down $2.39, or 4.1 percent, at $55.95.

S&P and its main rivals, Moody's Corp's (MCO.N) Moody's Investors Service and Fimalac SA's (LBCP.PA) Fitch Ratings, 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.

(Excerpt) Read more at reuters.com ...


TOPICS: Business/Economy; Crime/Corruption; Front Page News; Government; News/Current Events
KEYWORDS: bhofascism; corruption; democrats; doj; govtabuse; holder; holer; liberalfascism; obama
I wonder if this is an attempt by the Administration to influence the ratings of US bonds? Downgrade us again and we'll wreck your business?
1 posted on 02/04/2013 1:21:38 PM PST by LucianOfSamasota
[ Post Reply | Private Reply | View Replies]

To: LucianOfSamasota

That’s exactly the first thing that came to my mind as well.


2 posted on 02/04/2013 1:22:51 PM PST by jpl (The government spent another half a million bucks in the time it just took you to read this tagline.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

They’ve already sued the banks that sold the structured finance products so this is just the next step. I assume they will sue AIG for being the counterparty to billions of CDS’s.

As for the rating, UST’s rallied to all time highs (lows for yields) after the downgrade. It was meaningless to the market.


3 posted on 02/04/2013 1:25:01 PM PST by Wyatt's Torch (I can explain it to you. I can't understand it for you.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

Under Holder the Underwhelming, the DOJ has about as much gravitas as Dan Rather.

Of course, truth, justice, and the American Way are a joke under the chief dork, so convictions may be forthcoming.


4 posted on 02/04/2013 1:25:01 PM PST by Da Coyote
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

You’re not suggesting that there’s even the appearance of a conflict of interest? Naw, can’t be.


5 posted on 02/04/2013 1:26:59 PM PST by Lonesome in Massachussets (What word begins with "O" and ends in economic collapse?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

How long before the Dow is told to report whatever numbers the government tells it to put out???

Oh wait...

Does the whitehouse think S&P should be acting like the media????


6 posted on 02/04/2013 1:29:41 PM PST by GraceG
[ Post Reply | Private Reply | To 1 | View Replies]

To: Wyatt's Torch

We’re still monetizing our debt though, aren’t we? Hasn’t Bernanke decided on a permanent QE at the rate of $85 billion per month or so?


7 posted on 02/04/2013 1:29:41 PM PST by LucianOfSamasota (Tanstaafl - its not just for breakfast anymore...)
[ Post Reply | Private Reply | To 3 | View Replies]

To: LucianOfSamasota

I was warning everyone this was going to happen.

Wonder how many at S+P voted Obama. I’m guessing most....


8 posted on 02/04/2013 1:30:28 PM PST by Tzimisce (The American Revolution began when the British attempted to disarm the Colonists.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

It’s $45 billion/month primarily in in MBS’s. Bid to cover ratio’s for UST’s are still strong. UST’s are still the primary vehicle for “flight to safety.”


9 posted on 02/04/2013 1:38:32 PM PST by Wyatt's Torch (I can explain it to you. I can't understand it for you.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: LucianOfSamasota
I wonder if this is an attempt by the Administration to influence the ratings of US bonds? Downgrade us again and we'll wreck your business?

They should respond with "twitch and we'll down-grade you so fast your children will laugh when you ask for money."
After all, by S&P's rating system, the US would likely be 'CC' -- though a 'C-' would not be unreasonable.

The general meaning of our credit rating opinions is summarized below.
‘AAA’—Extremely strong capacity to meet financial commitments. Highest Rating.
‘AA’—Very strong capacity to meet financial commitments.
‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
‘BBB-‘—Considered lowest investment grade by market participants.
‘BB+’—Considered highest speculative grade by market participants.
‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
‘B’—More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
‘CCC’—Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
‘CC’—Currently highly vulnerable.
‘C’—Currently highly vulnerable obligations and other defined circumstances.
‘D’—Payment default on financial commitments.

Note: Ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

10 posted on 02/04/2013 1:49:48 PM PST by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Wyatt's Torch

Maybe it hasn’t actually happened yet? And its only PLANNED for 2013?

Anyway, a lot of folks carry the $85 billion figure, including $45 billion in UST’s:

“Under the Fed’s plan for 2013, the central bank will purchase $40 billion a month of mortgage-backed securities and $45 billion a month of long-term Treasury securities. That puts it on course to purchase $540 billion worth of Treasury securities if the policy is continued all year and $480 billion worth of mortgage bonds.”

http://online.wsj.com/article/SB10001424127887323981504578175362999853652.html

“Big Ben has been on a buying spree: In a third round of quantitative easing, the Fed is now snapping up $40 billion a month of mortgage-backed securities and $45 billion of Treasurys.”

http://www.forbes.com/profile/ben-bernanke/


11 posted on 02/04/2013 2:30:12 PM PST by LucianOfSamasota (Tanstaafl - its not just for breakfast anymore...)
[ Post Reply | Private Reply | To 9 | View Replies]

To: LucianOfSamasota

Imagine YOUR credit rating from TranUnion, Experian, etc. if you went from paying your Visa with your MasterCard to paying all of it with brightly colored pieces of paper that you produced on the office printer. Are negative numbers possible?

That is essentially what is happening at the Fed.


12 posted on 02/04/2013 2:53:50 PM PST by SargeK
[ Post Reply | Private Reply | To 7 | View Replies]

To: Lonesome in Massachussets; jpl; LucianOfSamasota

Like suing a broken thermometer, when you have a fever.

Thanks to ACORN, banks expected to get bailouts in ret. for issuing bad loans. So why was S & P “misleading” in that situation??

The only risk was to the taxpayers...


13 posted on 02/04/2013 3:14:22 PM PST by 4Liberty (Some on our "Roads & Bridges" head to the beach. Others head to their offices, farms, libraries....)
[ Post Reply | Private Reply | To 5 | View Replies]

To: LucianOfSamasota

What will Rahm have to say?


14 posted on 02/04/2013 3:22:39 PM PST by fso301
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

This is BS. Buncha trumped up charges that will go nowhere.

This is nobama and Holder kicking S&P’s ass for the credit downgrade and a warning not to do it again. Pure and simple.

Let’s hear it for S&P! Got moxie. Got principles. Got standards. Got cojones. Everything that Holder and nobama don’t have.


15 posted on 02/04/2013 3:33:19 PM PST by upchuck (America's at an awkward stage. Too late to work within the system, too early to shoot the bastards.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota
"I wonder if this is an attempt by the Administration to influence the ratings of US bonds? Downgrade us again and we'll wreck your business?"

Obviously. Many investor constituents are mad at S&P for downgrading US debt. They want the US dollar propped high, even if it means shutting down what little remains of US manufacturing and exports (even if it cases "TEOTWAWKI," and all of that). Our nation is morally bankrupt. Most business is government-connected, and most business produces nothing that we need.


16 posted on 02/04/2013 3:38:38 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

Or they’re looking to plug the deficit with ready cash.


17 posted on 02/04/2013 3:59:20 PM PST by 1010RD (First, Do No Harm)
[ Post Reply | Private Reply | To 1 | View Replies]

To: upchuck
This is BS. Buncha trumped up charges that will go nowhere.

No, the charges are legitimate but the question is Will they be filling charges against Moody’s or Fitch for their poor ratings? Doubtful after all Moody’s and Fitch did not downgrade the government. The other (and first) agency to downgrade their bonds, Egan-Jones, reached a settlement last week prohibiting them from rating sovereigns for 18 months. Perhaps this is what they want from S&P. The message is clear. If you downgrade sovereigns you will pay the price.

18 posted on 02/04/2013 4:00:09 PM PST by Roland
[ Post Reply | Private Reply | To 15 | View Replies]

To: LucianOfSamasota

Just plain ol ordinary garden variety fascism here folks. Nothing to see. Move along.


19 posted on 02/04/2013 4:41:00 PM PST by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LucianOfSamasota

>>We’re still monetizing our debt though, aren’t we?

More like monetizing our children’s and grand-children’s debt.

And as a parent, that irritates me into the “ETERNAL HOSTILITY” spectrum.


20 posted on 02/04/2013 5:48:11 PM PST by TArcher
[ Post Reply | Private Reply | To 7 | View Replies]

To: fso301

>>What will Rahm have to say?

BOHICA


21 posted on 02/04/2013 5:49:57 PM PST by TArcher
[ Post Reply | Private Reply | To 14 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson