• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

U.S. sues S&P over subprime ratings

Somerville

DP Veteran
Joined
Apr 29, 2012
Messages
17,822
Reaction score
8,296
Location
On an island. Not that one!
Gender
Undisclosed
Political Leaning
Socialist
not that I actually think any bankster will go to prison but still - it is a step in the right direction. A direction toward correcting the fallacious notion that Wall Street cares very much about honest behaviour.

Feds sue S&P over subprime ratings - Feb. 5, 2013

The Justice Department announced a lawsuit Tuesday against Standard & Poor's over its inaccurate ratings of investments tied to subprime mortgages in the run-up to the financial crisis.

The suit represents the first federal action in connection with the crisis against one of the country's major ratings agencies, which have long been cited as key culprits in the meltdown.

The Justice Department accuses S&P of giving deceptive ratings to mortgage securities between 2004 and 2007 that greatly underestimated the risk to investors. It did so, according to the suit, in order to collect fees from the firms that were pooling the risky home loans into securities.

more from Bloomberg - Default in 10 Months After AAA Spurred Justice on Credit Ratings - Bloomberg
 
Both sides are a bunch of gangster ridden hacks, with the government likely getting its instructions from Paul Krugman who's been critical of S&P.
 
Both sides are a bunch of gangster ridden hacks, with the government likely getting its instructions from Paul Krugman who's been critical of S&P.


and what's wrong with getting "instructions from Paul Krugman" (which they haven't but that's another story)? On the economic front he has been proven right more than any Austrian dreamer.
 
You think it is a mere coincidence that only S&P, yet not ANY of the other rating agencies, are "partially at fault"? This looks a lot like a political threat to S&P (and by extension the other rating agencies) not to downgrade Obama's very low interest gravy train. When the rated pay the fees of the raters then what other outcome was expected? If rater A gets "honest", and drops the rating, then they will be dropped and rater B will get that business. Hmm...

United States federal government credit-rating downgrade - Wikipedia, the free encyclopedia
 
While I would hardly be surprised if the motivations for this suit are corrupt, I'm not going to look a gift horse in the mouth. The rating agencies engaged in fraud by giving out AAA ratings to products they knew were crap and profited from doing so.
 
...But what about Moody's and Fitch?

...This couldn't be revenge for downgrading US debt during the debt ceiling standoff?

...
 
not that I actually think any bankster will go to prison but still - it is a step in the right direction. A direction toward correcting the fallacious notion that Wall Street cares very much about honest behaviour.



more from Bloomberg - Default in 10 Months After AAA Spurred Justice on Credit Ratings - Bloomberg

Yeah cause blaming the rating agencies is so much easier than cleaning house in DC to fix the built in problems those idiots legislated into the system.

Ratings agencies rated them highly because they expected GSEs to be backed by the full faith and credit of the US and in the end, they were. If they were not the government shouldnt have been hip deep into the banking business. Although, it ought to be interesting watching two pigs engage in a mud slinging contest---both sides are pretty dirty, the financial sector and the enablers in DC that wanted easy credit.
 
not that I actually think any bankster will go to prison but still - it is a step in
the right direction. A direction toward correcting the fallacious notion that Wall Street cares very much about honest behaviour.



more from Bloomberg - Default in 10 Months After AAA Spurred Justice on Credit Ratings - Bloomberg

Wow, just wow. Eric Holder helped enforce the anti " redlining" policies that helped create the massive democrat mandated sub-prime bubble.

You know when asking people for a down payment and refusing people that had poor credit history was deemed "racist".

Lol...the banks. Please. This administration is full of people that are directly responsible for the meltdown including the Democrat Congress.

Its a offesive diversion. Holder did the same thing when he went after Wells Fargo because they maintained their standards and didnn't give into the Democrat thugs who threatened banks.

Unreal how poorly educated some people are on this subject.
 
While I would hardly be surprised if the motivations for this suit are corrupt,
I'm not going to look a gift horse in the mouth. The rating agencies engaged in fraud by giving out AAA ratings to products they knew were crap and profited from doing so.

They gave them AAA ratings because those MBS were backed by the United States Govt through the GSE's.

Or did you forget by the time the dust cleared the GSEs were up to their eyeballs in toxic MBSs

The bought them, they bundled them, they sold them to investment bankers.

This is Chicago thug politics BECAUSE a Rating decreasre on our bonds is right around the corner.

That makes Captain dumbshyt look bad you know.
 
They gave them AAA ratings because those MBS were backed by the United States Govt through the GSE's.

Or did you forget by the time the dust cleared the GSEs were up to their eyeballs in toxic MBSs

The bought them, they bundled them, they sold them to investment bankers.

This is Chicago thug politics BECAUSE a Rating decreasre on our bonds is right around the corner.

That makes Captain dumbshyt look bad you know.

When S&P gives a loan a AAA rating, they are making a good faith claim that they believe it has a low risk of default. They are not saying "its a piece of junk but don't worry the government will bail you out anyway".

S&P made fraudulent claims when they gave crap mortgages AAA ratings and they should be brought to justice for it. I am not unaware that the motivations for the lawsuit may be corrupt, but that doesn't make the case invalid. Its extremely common for the government to do the right thing for the wrong reason.
 
You know when asking people for a down payment and refusing people that had poor credit history was deemed "racist".
That's not so. The only thing the government stepped in on is (for example.) if a black man had a good credit rating, than he could not be turned down for a loan. The government can't make a financial institution proceed on a bad credit rating. And about those so-called Democrat thugs? let Standard and Poor start pointing fingers and bringing it in to a courtroom.
 
That's not so. The only thing the government stepped in on is (for example.) if a black man had a good credit rating, than he could not be turned down for a loan. The government can't make a financial institution proceed on a bad credit rating. And about those so-called Democrat thugs? let Standard and Poor start pointing fingers and bringing it in to a courtroom.

It is true, CRA forced many bankers to lend money to people that normally would have been turned away.
 
When S&P gives a loan a AAA rating, they are making a good faith claim that they
believe it has a low risk of default. They are not saying "its a piece of junk but don't worry the government will bail you out anyway".

S&P made fraudulent claims when they gave crap mortgages AAA ratings and they should be brought to justice for it. I am not unaware that the motivations for the lawsuit may be corrupt, but that doesn't make the case invalid. Its extremely common for the government to do the right thing for the wrong reason.

The S&P isn't the cause or the one who engineered our near economic collapse. They held those MBS to the same AAA standards of the United States Treasury bonds and its not a coincidence since most of those securities were in fact guaranteed by the US Govt.

Show proof that the S& P knew the GSEs were bundling bad loans with good ones to sell off to fund the secondary market and I'll listen.



Eric Holder use to work for Janet Reno when banks were being strong armed into lowering underwriting standards for loans.

Its so petty and childish and blatant what they're doing by threatening the S&P. And right when the US is borrowing Trillions and tax reciepts are shrinking.

Of course the S&P's going to down grade our Treasuries.

When those who created it are either in power or share their ideology and are being ignored.

Barney Frank was allowed to write banking legislation on his way out. If there was one politician more responsible for the sub-prime debacle it was him.
 
It is true, CRA forced many bankers to lend money to people that normally would have been turned away.
Well I guess we will see when the trial starts, right? :shrug: :wink:
 
Well I guess we will see when the trial starts, right? :shrug: :wink:

Trials very seldom focus on truth, even they are political arenas now.
 
That's not so. The only thing the government
stepped in on is (for example.) if a black man had a good credit rating, than he could not be turned down for a loan. The government can't make a financial institution proceed on a bad credit rating. And about those so-called Democrat thugs? let Standard and Poor start pointing fingers and bringing it in to a courtroom.

Wrong, try again.

The CRA was given regulatory power in the early 90s to stop "redlining".

Redling is actually what banks have been doing for the last 100 years or so to guarantee they don't crash and burn lending bums money.

Its making sure the loan recipient had collateral, credit and a down payment.

Also in the early 90s the GSEs made massive commitnents to the sub-prime market. Fannies sub prime originations for the last 70 years as a percentage of their entire originations ? 10%

After 2009 ? 45%. So the "banks" forced the GSEs to buy up sub-prime loans, forced them to package and sell those loans to the investment banks as dirivitives ?

Nope. Clinton put the GSEs in high gear and the regulatory control of the CRA and HUD forced private banks to create a loan for lenders at risk.

Why do you think Holder just fined Wells Fargo 175 million dollars ?

Plueeeze pick up a book
 
The S&P isn't the cause or the one who engineered our near economic collapse. They held those MBS to the same AAA standards of the United States Treasury bonds and its not a coincidence since most of those securities were in fact guaranteed by the US Govt.

Show proof that the S& P knew the GSEs were bundling bad loans with good ones to sell off to fund the secondary market and I'll listen.

Private Label MBS products were given AAA ratings by S&P, so your attempt to link everything to the GSE's is without merit. The rating that S&P gave were clearly false and they obviously had a massive conflict of interest. The only question is whether S&P can get away with pretending they are merely grossly incompetent instead of fraudulent.

Eric Holder use to work for Janet Reno when banks were being strong armed into lowering underwriting standards for loans.

Its so petty and childish and blatant what they're doing by threatening the S&P. And right when the US is borrowing Trillions and tax reciepts are shrinking.

Of course the S&P's going to down grade our Treasuries.

When those who created it are either in power or share their ideology and are being ignored.

Barney Frank was allowed to write banking legislation on his way out. If there was one politician more responsible for the sub-prime debacle it was him.

There is no legal concept in our justice system where you can be excused of committing fraud by whining about the misdeeds of other parties. You can quite reasonably argue that there are plenty of other people who should be in the noose right alongside S&P, but that doesn't make them innocent.
 
Wrong, try again. The CRA was given regulatory power in the early 90s to stop "redlining". Redling is actually what banks have been doing for the last 100 years or so to guarantee they don't crash and burn lending bums money.

It is worth noting that 80% of sub-prime loans were issued by institutions which did not fall under the jurisdiction of the CRA. In other words, they deliberately sought out high-risk clientele of their own free will. Back then, the risk wasn't that great; a financial institution could easily wind up making a profit from a foreclosure. But then the Real Estate bubble burst, home values depreciated, and they were saddled with foreclosed properties no one wanted to buy.
 
When S&P gives a loan a AAA rating, they are making a good faith claim that they believe it has a low risk of default. They are not saying "its a piece of junk but don't worry the government will bail you out anyway".

S&P made fraudulent claims when they gave crap mortgages AAA ratings and they should be brought to justice for it. I am not unaware that the motivations for the lawsuit may be corrupt, but that doesn't make the case invalid. Its extremely common for the government to do the right thing for the wrong reason.


S&P gives ratings to securities not loans. S&P is accused, not of giving bad ratings, but for breaking their own rules in which the raters told the banks what to put in the securities to make them AAA. But all of the rating agencies did this.
 
not that I actually think any bankster will go to prison but still - it is a step in the right direction. A direction toward correcting the fallacious notion that Wall Street cares very much about honest behaviour.



more from Bloomberg - Default in 10 Months After AAA Spurred Justice on Credit Ratings - Bloomberg

It should also be pointed out.. the case against S&P is a JOKE. Citi and BofA went to S&P and paid them to rate it. Then Citi And BofA underwrote every "listed" CDO the Government claims S&P defrauded them on. If your the under writer, you are the one that knows the most about it. It's your Quants who wrote the damn CDO. Yet S&P is to be blamed.. that's bull****. Because Citi and BofA were doing what is called regulatory arbitrage. Which is taking a bunch of loans, turn them into a CDO, have a rating agency stamp AAA on them, buy them back. Presto! Instead of some subprime loans, Citi and Bof A has a AAA bond on the books. Regulatory capital ratios are improved, as if by magic.

Problem was Citi and BofA were caught holding the bag of their own crap instead of scamming someone else.
 
and what's wrong with getting "instructions from Paul Krugman" (which they haven't but that's another story)? On the economic front he has been proven right more than any Austrian dreamer.

Krugman is a biased weasel. I don't give a damn about his long list of credentials, he's purely political.
 
It is worth noting that 80% of sub-prime loans were issued by institutions which did not fall under the jurisdiction of the CRA. In other words, they deliberately sought out high-risk clientele of their own free will. Back then, the risk wasn't that great; a financial institution could easily wind up making a profit from a foreclosure. But then the Real Estate bubble burst, home values depreciated, and they were saddled with foreclosed properties no one wanted to buy.

No one's saying that the CRA or HUD were responsible for creating the crisis by themselves. However, they were certainly responsible for creating the financial atmosphere which made the subprime crisis possible in the first place. They enforced risky lending among the major players until it became a profitable trend and then encouraged everyone else to get in on the action afterwords in order to try and inflate the housing and credit bubbles.

If you were to describe the 2008 financial crisis as the collapse of a deck of cards, I would definitely say that the CRA was responsible for the structure's foundation, and probably the next couple of levels after that.
 
Last edited:
Krugman is a biased weasel. I don't give a damn about his long list of credentials, he's purely political.



Slander the professor all you wish - don't make those statements true. Krugman has been more right about the financial crisis than any of your heroes
 
One can see an almost religious fervour and faith on the part of some posters when they post easily refutable nonsense - not that it ever changes their beliefs but maybe some readers will take the time to check stuff out for themselves

The S&P isn't the cause or the one who engineered our near economic collapse. They held those MBS to the same AAA standards of the United States Treasury bonds and its not a coincidence since most of those securities were in fact guaranteed by the US Govt.

Show proof that the S& P knew the GSEs were bundling bad loans with good ones to sell off to fund the secondary market and I'll listen.



Eric Holder use to work for Janet Reno when banks were being strong armed into lowering underwriting standards for loans.

Its so petty and childish and blatant what they're doing by threatening the S&P. And right when the US is borrowing Trillions and tax reciepts are shrinking.

Of course the S&P's going to down grade our Treasuries.

When those who created it are either in power or share their ideology and are being ignored.

Barney Frank was allowed to write banking legislation on his way out. If there was one politician more responsible for the sub-prime debacle it was him.



Suits reveal details on Standard & Poor's views - latimes.com

As the housing bubble was bursting in 2007, an analyst at credit rating firm Standard & Poor's made light of the situation with a song.

He went from office to office serenading co-workers with his ode to America's deepening real estate crisis. "Strong market is now much weaker, subprime is boi-ling o-ver, bringing down the house," the analyst sang to the tune of the Talking Head's "Burning Down the House."

The scene was among the details — some meant to be embarrassing — released in government lawsuits against the world's biggest credit rating firm. The complaints unveiled Tuesday by the Justice Department, and states including California, found S&P analysts seeming to mock their role as gatekeepers of the financial system, in which they are paid to grade the safety of stocks, bonds and other securities.
<snip>
Government investigators gathered emails and instant messages that they said showed S&P gave rosy ratings to securities that the firm knew were ready to implode. The lawsuits claim that executives were obsessed with maintaining good relationships with the banks that paid them to analyze securities. And when those securities began to sour, they persuaded analysts to turn a blind eye to it.

One S&P analyst put it bluntly: "Let's hope we are all wealthy and retired by the time this house of cards falters."

Others have noted that the vast majority of sub-prime loans were done by non-regulated entities, which for some reason various banks thought were good buys and as a consequence some really poor financial choices did come under the various regulations and laws that cover the banks; which meant the taxpayers became more exposed to the failures.
 
Back
Top Bottom