Tags: S&P | rating | mortgage | suit

WSJ: Government’s Suit Against S&P Should Be Dismissed

By    |   Friday, 26 April 2013 07:53 AM

A federal judge should grant a request from Standard & Poor's to dismiss a $5 billion fraud lawsuit filed against it by the Justice Department, according to a Wall Street Journal editorial.

The suit accuses S&P of claiming to be "independent" and "objective" and then granting triple-A ratings to mortgage-backed securities that it knew were risky.

But the suit names as victims two banks and a failed credit union that the government has charged as perpetrators of the mortgage crisis in other suits.

Editor's Note:
Use This Single Loophole to Pay Zero Taxes in 2013

“The truth is that S&P's ratings on mortgage bonds, along with those issued by Moody's and Fitch, did inflict terrible damage,” the editorial states.

“But this was not because employees at these firms are more stupid or unethical than those at other businesses. The damage occurred because the same government that's now suing S&P required financial institutions to use the ratings issued by S&P and the other raters.”

What the government should be doing is trying to reform some of the policies that led to the financial crisis, Journal editors write.

“But instead of reform, Washington is inventing lawsuits that require the government to pretend that those who contributed to the crisis were actually victims.”

In asking for dismissal of the suit, S&P lawyers argued that the company’s claims of being independent and objective were mere "puffery" that clients weren’t supposed to view as literally true.

"Even if it's a viable legal argument, it's a pretty unattractive argument for S&P to be putting forward since they're basically in the business of charging clients for their reputation," Samuel Buell, a former federal prosecutor, told The Wall Street Journal separately.

"What they're saying here is, 'When we're talking to investors about our own reputation, we're engaging in meaningless puffery.'"

Editor's Note: Use This Single Loophole to Pay Zero Taxes in 2013

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
FinanceNews
A federal judge should grant a request from Standard & Poor's to dismiss a $5 billion fraud lawsuit filed against it by the Justice Department, according to a Wall Street Journal editorial.
S&P,rating,mortgage,suit
314
2013-53-26
Friday, 26 April 2013 07:53 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved