Hardly anyone remembers now that the Obama justice department brought a civil suit against Standard & Poor’s in February 2013, making the following allegation about S&P:
The United States said S&P inflated ratings and understated risks associated with mortgage securities, driven by a desire to gain more business from the investment banks that issued those securities. S&P committed fraud by falsely claiming its ratings were objective, the lawsuit said.But more readers probably remember that it was S&P that downgraded U.S. Treasury securities in August 2011.
Well, sure. Some guy downgrades you, you sue the SOB. Doesn’t matter that you’re so ridiculously in debt, it’s obvious that S&P was not only objective but perfectly correct, and the only thing left to wonder is why it took them so long.
The media would never stop talking about it if a Republican president behaved this way. It would be a hideous, epic abuse of power; the next stop would be Fascist Boulevard, and the one after that Death Camp Square.
Let’s be clear about what it actually is – or at least what it appeared to be, back in February 2013. It wasn’t necessarily an abuse of power. It’s lawful for the U.S. government to inquire into S&P’s objectivity and bring suit over it. But lawfulness doesn’t imply justification, and the timing was about as ethically suspicious as it gets.
What it looked like, last year, was perhaps not so much an attempt to intimidate or punish S&P, as a means of playing for time in the fiscal arena. Obfuscate and deflect the decisive nature of the credit-rating cloud the U.S. is under. Cast doubt on the ratings agency; create the narrative that this “objectivity” issue has to be adjusted before we get back to the topic of tough-love for the U.S. government. This is classic political maneuvering, and it’s not necessarily unlawful; what matters is that it’s irresponsible.
No one who’s $15, 16, or 17 trillion in debt can claim that he’s being responsible by playing for time and not changing his ways. What it’s an abuse of is the people’s trust: most specifically, of our orderly, responsible consent to being put under financial obligation by a disorderly, irresponsible administration.
But that was then. Now it looks like, inevitably, it was more than that. (I think it was also “that”: the political maneuver to spike the guns of a lurking threat to your power and freedom of action is too obvious.) But apparently, then-Treasury Secretary Timothy Geithner made threats against S&P in the wake of the rating downgrade in 2011, a claim that has emerged with court filings by S&P incident to the lawsuit.
The Blaze has quotes from the court document (emphasis added):
[I]n August 2011, Chief Executive Officer and President of McGraw Hill [S&P’s parent company], Harold McGraw III. Mr. McGraw describes personal communications made to him first on behalf of the Secretary of the Treasury, and then personally by the Secretary himself in the days following the downgrade. The Treasury Secretary angrily chastised S&P for the downgrade, stating that S&P’s conduct would be “looked at very carefully” and that such behavior could not occur without a response from the United States.Read the whole thing.
This was followed on Monday by a call to Mr. McGraw from the Secretary of the Treasury, Timothy Geithner, in which Secretary Geithner stated that S&P had made a “huge error” for which it was “accountable.” He said that S&P had done “an enormous disservice to yourselves and your country…”
At this point, it’s hard to decide whether there should be a Scorsese movie – Obamafellas – or a comic opera with Nathan Lane.