Department of Justice?

The Department of Justice (DOJ) has announced that it’s suing the ratings agency, Standard & Poor’s for up to $5 billion because the DOJ claims it inflated the ratings of collateralized debt and helped cause the housing crash. They are not, at this time or perhaps ever, suing the other rating agencies, Moody’s and Fitch, that offered similar ratings. Why is that?

In August 2011, Standard & Poor’s (S&P) downgraded U.S. government debt as they believed that our government was so deep in debt, its ability to repay it was compromised. As an aside, Moody’s just downgraded Britain’s debt from AAA. I doubt that the British government will sue.

As only S&P is being sued, it leads me to the conclusion that its punishment for the ratings downgrade, and a warning to other rating agencies to watch their backs and say nice things about our government… or else. Is this thuggery or not so subtle coercion against the rating agencies?

Our government gets away with this as the public doesn’t really care. It may affect the public, but the cause and effect are so far apart that they don’t recognize the long term ramifications of suing S&P for telling the truth.

And that’s why the DOJ will get away with it.