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.