Before the bottom fell out on our economy back in 2007 – credit rating groups like S&P and Moody’s were giving positive investor ratings to the mortgage backed securities largely blamed for the collapse that we are still recovering from years later. In 2011, S&P was the only credit rating agency to downgrade the rating of the United States after the debt limit crisis of that summer. This week the Department of Justice filed a civil suit against S&P for the company’s role in incorrectly characterizing the safety of mortgage backed securities. S&P, noticing the absence of its fellow negligent agencies in the suit, has suggested that perhaps their persecution is motivated by retribution for the downgrade–which the Obama administration had immediately questioned in 2011.
S&P’s attorney Floyd Abrams tells the Wall Street Journal that “things seemed to rev up in terms of the intensity” of the federal investigation of S&P’s mortgage backed securities ratings after the downgrade of the U.S. credit.
On ‘Real News’ Tuesday the panel discussed the timeline leading up to the S&P lawsuit and how likely (or unlikely) it is that the Obama administration is using the DOJ for vengeance.