That’s the message McGraw Hill Chairman Terry McGraw learned in 2011 after his company — Standard & Poor’s — downgraded the U.S.’s 60-year-running AAA credit rating to AA+ with a negative outlook, Bloomberg reported.
McGraw, in a federal court filing in Santa Ana, California on Monday, declared that then Treasury Secretary Tim Geithner called him on Aug. 8, 2011, after S&P was the only credit ratings company to downgrade the US debt. Geithner, McGraw said, told him that S&P would be held accountable for the downgrade.
“S&P’s conduct would be looked at very carefully,” Geithner told McGraw according to the court filing. “Such behavior would not occur, he said, without a response from the government.”
The government alleged in its Feb. 4, 2013, complaint that S&P knowingly downplayed the risk on securities before the credit crisis to win business from investment banks seeking the highest possible ratings to help sell the instruments.
The Justice Department accused S&P of lying about its ratings being free of conflicts of interest and may seek as much as $5 billion in civil penalties.
No other large ratings agencies were charged at that time.
The declaration filed Monday comes as part of a request to US District Judge David Carter for an order that the Justice Department hand over the documents it seeks for its “retaliation defense.”
S&P wants to force the feds to hand over potential evidence the company says will support its claim that the government filed a fraud lawsuit against it last year in retaliation for its downgrade of the U.S. debt two years earlier.
S&P said the government was initially investigating all three major credit rating companies, including Moody’s and focused on S&P exclusively after the McGraw Hill unit downgraded US debt.