Wednesday, February 4, 2015

S&P: Steal and Prosper

S&P Pays Fine, Does Not Admit Guilt:

Nearly a decade after credit ratings agencies became a symbol of a financial crisis they helped create, one of the industry’s biggest players faces a costly reckoning.

Standard & Poor’s, a ratings agency accused of inflating its assessment of mortgage investments that spurred the 2008 crisis, announced on Tuesday that it had agreed to pay $1.37 billion to settle civil charges from the Justice Department and from 19 state attorneys general and the District of Columbia.

The settlement, which does not require judicial approval, signals that the investigation of crisis-era misdeeds has entered a final stage.

The S.&P. settlement, on the heels of banks and other financial institutions collectively paying more than $40 billion to end federal and state investigations, was among the government’s few remaining items of unfinished business from the crisis. No other ratings agency has faced a Justice Department lawsuit, though prosecutors continue to investigate actions by Moody’s.
As you'll remember, the ratings agencies were direct, criminal enablers of the Great Swindle leading to the Great Recession (S&P, Moody's and others were, in the structures and careers in Burglary, Wall Street's Tipsters).  With this announcement, S&P has announced itself free and clear of the entire mess, without having to admit any guilt either.
For S.&P., the settlements provide some peace in a process rife with animosity. After years of lowball offers and invective — S.&P. contended the Justice Department’s case was “retaliation” after it cut the stellar AAA credit rating of the United States in 2011— it was unclear if the ratings agency would ever back down.

But in a statement of facts with the settlement, the company acknowledged that “the voluminous discovery provided to S.&P. by the United States to date” does not “support its allegation” that the Justice Department acted out of spite. S.&P. agreed to withdraw that allegation.
And Holder, clinging to his job in his waning days as AG, said with a straight face:
“The settlement we have reached today not only makes clear that this kind of conduct will never be tolerated by the Department of Justice, it also underscores our strong and ongoing commitment to pursue any company or entity that violated the law and contributed to the financial crisis of 2008,” Attorney General Eric H. Holder Jr. said at a news conference on Tuesday.
Except when we don't. But if we do, it will always be in civil court, where these sociopaths in suits can pay the fine out of petty cash and never admit any wrongdoing.

In a wonderful role reversal, some of the clowns on the Street are even asserting it's the government who's shaking them down now.
Such outcomes — $1 billion is now a floor, not a ceiling for a settlement — have led Wall Street lawyers to criticize what they call a government shakedown.
Well, I guess if anyone would know a shakedown...amiright?
And yet, some lawmakers complain that the civil lawsuits are a slap on the wrist for companies that helped ignite the worst financial crisis since the Great Depression. Not one top executive at S.&P., or any major Wall Street firm, was charged criminally for the misdeeds during the era.
And I repeat myself. For the fact remains, only the threat of incarceration in the Big House (maximum security prison) would ensure this kind of lunacy would never happen again. From a deterrent perspective, it has a way of concentrating the mind.

But when the final chapter is written, the Wolves of Wall Street will have the last laugh, as they pay their fines, don't admit any wrongdoing, break open the scotch and cigars, and get ready for the next scam to perpetrate on the American (and global) financial markets.

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