U.S. To Sue S&P Over Mortgage Securities Ratings

 

In completely unrelated news, S&P downgraded the United States’ credit rating in August 2011.

Standard & Poors Rating Services, a subsidiary of The McGraw-Hill Companies, Inc. (MHP), issued a press release announcing that the U.S. Department of Justice told them to expect a lawsuit over S&P’s ratings of some CDOs from 2007.

S&P then screamed at league officials over the power outage . . . err, issued a response saying that:

  • It regrets being wrong
  • Everyone thought the problems were “contained”
  • Other rating agencies did it too
  • They downgraded lots of securities even before, well, before the first lawsuits

S&P commented:

“Regrettably, the breadth, depth, and effect of what ultimately occurred were greater than we – and virtually everyone else – predicted.” 

Presumably, “virtually everyone else” includes those who were and were not in the business of monitoring economic conditions and their effects on securities and markets and are thus considered experts and granted exclusive franchise to engage in their business by which some institutions are required to abide in order to carry out their own business.

Fear not, S&P “will continue to enhance our governance, training, quality control, analytic models and investor education.”  Need proof?  For more information about “the extensive enhancements to our business – both completed and ongoing,” you can go to www.standardandpoors.com/changes. What else could you need?

On the other hand, there was not indication that the government was looking internally to see if regulations concerning the relationship between capital requirements and credit ratings and the regulatory structure around the credit agency business generally had anything to do with it.  Of course not.

Links:
S&P Press Release Responding to Notice of DOJ Lawsuit

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