That’s what the Wall Street Journal wants to know. And me too.
As you may be aware, the Justice Department is suing Standard & Poor’s to the tune of $5 billion for giving all those nice ratings to banks’ subprime mortgage-backed securities even while the market began to fall apart – as homeowners figured out they should have rented, bought cheaper homes, or moved in with their parents.
I have no issue with, at the very least, an investigation of these ratings agencies, which profited handsomely from their incestuous relationships from the very banks they were rating.
My problem is not that the government is suing S&P. My problem is that it is not suing Moody’s and Fitch.
Because you see, happens that, of the three credit rating agencies, ONLY S&P INJECTED A NOTE OF HONESTY INTO GOVERNMENT ACCOUNTING by downgrading the federal government’s credit rating last year.
The Journal writes:
So why wasn’t a federal case made in 2008 or 2009 or 2010 or 2011 or 2012? . . .
S&P’s attorney Floyd Abrams tells us that “things seemed to rev up in terms of the intensity” of the federal investigation after S&P’s historic downgrade of United States credit following Washington’s debt-limit fight in 2011.
Meanwhile, a McClatchy Newspapers MNI -2.01% report says that it was around that time that Moody’s, which did not downgrade the government, was dropped from the federal investigation. Ask any investor and he’ll likely tell you that Moody’s was equally awful in forecasting the mortgage debacle.
Is this payback? Could it be? The Obama administration?
At the very least, with S&P in the sights of a $5 billion federal pistol, are they or any other credit agencies going to issue new downgrades of the government? I sure doubt it.