More evidence points to fed prosecutorial abuse of S&P over downgrade of federal debt rating

If the Obama administration used federal prosecutors to exact vengeance on Standard and Poor’s for downgrading the rating of federal debt, that would be a serious crime, an impeachable offense if it could be traced to the Attorney General or the President (not that anyone other than Democrats is interested in impeachment).  It would be evidence of thug government, where the rule of law has been replaced with the law of the jungle, using prosecutorial power as an instrument of political intimidation, as in Travis County, Texas.

That’s why a recent court filing by Standard and Poor’s may lead to evidence developing that, if not a smoking gun, at least carries a whiff of cordite. The Wall Street Journal reports:

Standard & Poor's claims in a new court filing that it has documents showing that government lawyers who have targeted the firm over its flawed ratings on mortgage bonds also had "intense interest in and engagement regarding S&P's downgrade of the United States."

The Department of Justice sued S&P last year for an eye-catching $5 billion, and S&P has argued that it was singled out for payback because it was the only major ratings agency that stripped Uncle Sam of its triple-A credit rating following Washington's 2011 debt-limit brawl. Somehow competitors Moody's and Fitch, which issued equally flawed opinions about mortgage risks before the credit crisis, got a pass. They didn't downgrade U.S. debt.

Justice says there was no connection between the downgrade and its decision to charge S&P. But in a Tuesday federal court filing in the Central District of California, S&P says it has obtained internal Justice documents showing "that the two topics were often linked."

The documents are under a protective order and thus not public. But it's safe to assume S&P would want to stick to the facts because federal Judge David Carter can see the documents too. If S&P is right, then Justice will have to explain why lawyers tasked with investigating pre-crisis mortgage bonds were so keenly interested in a downgrade of government debt that took place years after the mortgage bond ratings. Do prosecutors investigate every time someone expresses a skeptical view on Treasury bonds?

There will be a further hearing in September, and it is possible we will leran more about the government docuemnts referenced in S&P’s filing. We will stay tuned.

 

If the Obama administration used federal prosecutors to exact vengeance on Standard and Poor’s for downgrading the rating of federal debt, that would be a serious crime, an impeachable offense if it could be traced to the Attorney General or the President (not that anyone other than Democrats is interested in impeachment).  It would be evidence of thug government, where the rule of law has been replaced with the law of the jungle, using prosecutorial power as an instrument of political intimidation, as in Travis County, Texas.

That’s why a recent court filing by Standard and Poor’s may lead to evidence developing that, if not a smoking gun, at least carries a whiff of cordite. The Wall Street Journal reports:

Standard & Poor's claims in a new court filing that it has documents showing that government lawyers who have targeted the firm over its flawed ratings on mortgage bonds also had "intense interest in and engagement regarding S&P's downgrade of the United States."

The Department of Justice sued S&P last year for an eye-catching $5 billion, and S&P has argued that it was singled out for payback because it was the only major ratings agency that stripped Uncle Sam of its triple-A credit rating following Washington's 2011 debt-limit brawl. Somehow competitors Moody's and Fitch, which issued equally flawed opinions about mortgage risks before the credit crisis, got a pass. They didn't downgrade U.S. debt.

Justice says there was no connection between the downgrade and its decision to charge S&P. But in a Tuesday federal court filing in the Central District of California, S&P says it has obtained internal Justice documents showing "that the two topics were often linked."

The documents are under a protective order and thus not public. But it's safe to assume S&P would want to stick to the facts because federal Judge David Carter can see the documents too. If S&P is right, then Justice will have to explain why lawyers tasked with investigating pre-crisis mortgage bonds were so keenly interested in a downgrade of government debt that took place years after the mortgage bond ratings. Do prosecutors investigate every time someone expresses a skeptical view on Treasury bonds?

There will be a further hearing in September, and it is possible we will leran more about the government docuemnts referenced in S&P’s filing. We will stay tuned.

 

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