They say Justice is blind. That sure would explain Eric Holder’s choice of targets.
This week, Obama’s attorney general — joined by more than a dozen state attorneys general — sued Standard and Poor’s for fraud, accusing the nation’s largest credit agency of giving securities backed by subprime mortgages unjustifiably high ratings.
It’s true that when the financial crisis hit, these ratings proved hollow. It’s also true that some internal S&P e-mails are highly embarrassing.
A court will decide whether that shows a deliberate effort to defraud or a clash of competing opinions.
Of course, if Justice really wanted to make the credit agencies pay, and reform the financial system in the process, it would enforce the one provision in Dodd-Frank that makes sense: scrapping the Securities and Exchange mandates that sellers of certain financial products get ratings from approved agencies — such as S&P.
For ratings agencies, being on a government-approved list meant guaranteed business — instead of having to compete for that business by the accuracy of their ratings.
In the meantime, the biggest fraud of the financial crisis remains unaddressed: the claim by Fannie Mae and Freddie Mac that the US taxpayer was not on the hook for their securities. Once those assets hit the fan, the public found out otherwise.
Thus far, Mr. and Mrs. American Taxpayer have had to cough up roughly $150 billion to bail out Fannie and Freddie.
Sure puts the $5 billion Justice is seeking from Standard & Poor’s in perspective.