Justice Dept. Investigating S.&P. Over Mortgages (Payback Time)

ny times ^ | 8/17/2011 | Louise Story

[tobyhill]

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.

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. 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.

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. 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.

[evad]

Didn't the Bush administration tell them that they needed to stop the issuing of all these worthless loans?
Isn't this the Bwaney Fwank and Chris Dodd fiasco coming back to roost?
Shouldn't we bundle them up in the same lawzoot?

[Aunt Polgara]

This was the main headline on Drudge earlier this morning, but has now completely disappeared, even from the “recent Drudge headlines” link. hmmm...

[icanhasbailout]

Good morning.

S&P has the right of free speech, so it should be able to say whatever it pleases, without interference from the government. They haven't "threatened" the US with anything other than the truth about the nation's financial condition - which is far worse than even S&P admits to.

If you are concerned about actual threats being made by a foreign entity, I would suggest that this be at the top of your list: China must punish US for Taiwan arm sales with 'financial weapon'

Long story short, if telling the truth constitutes a "threat", the problem lies not with the truth-teller but with the underlying situation (in this case the US' financial condition) that makes it so.

If the leaders of this country were not borrowing and spending addicts, S&P could not hurt us no matter what it did. It's time to stop killing messengers and confront the real problem: we spend too much money.