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The US government blaming Standard and Poor's and its parent company McGraw-Hill for its part in the financial meltdown.
But the ratings agencies say they did nothing wrong and they have an interesting defense.
Joining me now with the very latest on the case former federal prosecutor Fred TC great to see if Fred thanks for helping me.
Renting thank you and -- -- like still some of the arguments that are being made here what the government saying.
-- the what the government saying he's actually they brought this case under a 1989 law that says basically they're saying that SMP.
Such as banks that are federally insured and that's -- gives them federal jurisdiction to civil suit.
It's not a criminal case -- there augmented that they defrauded these institutions by giving these triple -- rating cities tedious.
Alright here's what they say that right from the lawsuit S and p.'s desire for increased revenue and market share.
-- estimated downplay and disregard the troops and the credit risk in order to favor the interests of large investment banks and other C as a paid out.
They're saying I got all wrong they say a DOJ lawsuit would be entirely without factual or legal merit the DOJ would be wrong -- contending.
-- S&P ratings were motivated by commercial considerations.
And not issued in good faith now -- you friend when you look at that.
Does that ring trillion.
No well I'd say why -- I actually think that it knew what they put in there about being motivated by profit was a little bit of -- cheap shot okay.
There are -- for profit corporation every corporation in America is motivated by profit the question is whether or not they intended to defraud people.
Over over these things were the feature roughly thirteen million dollars so.
I mean I thought that that was that was kind of -- of -- cheap shot by DOJ okay.
-- one doesn't mean.
-- debate that seems to be emerging now that.
-- -- Do you buy back.
Guess what you know -- -- it well now not really and I'll tell you why -- -- if you hate Jerry Hollywood making a movie about my life.
And and they need to give me a million dollars of your own money to invest in this deal with me.
And you get the feeling was a fraud it's a complete fraud right to decide what -- you reasonably relied on that would put that aside.
Let's consider -- initiative.
I yeah actually -- but the point.
Yeah exactly and and it's it's speech -- you can -- -- speech.
Right exactly OK so this other big questions come into play today it's very likely very possible -- -- will downgrade the nation's debt once again.
Some people are -- they're saying the air colder is really holding S and p.'s feet to the fire.
On this went and that's the pressure.
Point that they're going after right now is this a lawsuit that is -- it could be a quid pro quo you scratch my back -- stretchers do you believe that.
You know like Jerry I don't want to believe that a cake if you know what the proudest day of my life was a day became an assistant US attorney -- work for the department of justice and it would turn my stomach.
If they have been used to -- -- hatchet -- for the administration but there's a lot of red flags here.
-- and Fitch gave the exact same ratings at the exact same time.
They haven't been sued SMP was the only one who downgraded the government's.
-- in 2011.
And and I just I I there's a lot of things of bother me why wasn't Moody's included why wasn't -- included why pick on S and -- As well and any -- -- that's a very good question and and one in a lot of people.
-- are making today I wanted to get your reaction in the Financial Crisis Inquiry Commission had their view on a rating agencies and whether they should be to blame here's what they -- -- receiving agree with this.
Agencies were essentially cogs in the wheel of financial destruction and key enablers.
Of the financial meltdown true or false.
But -- you know what that's a great sound -- Jerry and you know what celebrates -- great for words like -- huge -- on TV itself by don't win lawsuits OK you gotta have evidence facts and law.
And and they can say that but I can point to a hundred different other things that as you pointed out at the top of the segment.
We look resulted in -- in in in this kind of financial perfect storm.
So they say that they were the content like yeah okay where they responsibly yes should they have not given triple -- rating Citi CDS probably not.
And good luck -- Brad they were the last stop right I mean they were the last potential break in this says stem.
You had you had that individual and of people didn't getting mortgages who were getting in over their heads they did wrong things the banks gave them these mortgages they did bad things.
But at the end of the day the investors were looking for advice on whether these this mortgage debt was a good investment or not S&P Fitch Moody's -- said sure that's great we like it.
Well and you know want altogether I agree with you they were that they they -- of the safety net that was supposed to be.
You know -- to be -- to catch everyone and if they had all done their jobs not just that simply.
Then perhaps this could have been -- but think about -- in light of this lawsuit.
If that's a peek announced that this is junk you have Moody's and Fitch out there seeing we're given Tripoli -- any race this kind of stuff.
You know that's not gonna solve a single problem let's -- -- stop this from happening so I get what you're saying if you're gonna -- that's gonna be your position.
Single -- told them.
Right I -- well maybe well we just don't know yet write anything could happen.
Well what do you especially if you look into your crystal ball what do you see years and years and years of litigation and are evaluating when millions of -- I spent on ridiculous attorney fees.
If there's -- -- it's the lawyers fair employment act -- -- if you listened quietly you can hear the buzz -- in the Pacific northwest.
Cutting -- every -- for the -- million pieces of paper that day and at the end of the day they'll argue and fight and all of upset on the case for a couple hundred million bucks and an allegation of no wrongdoing.
Exactly a -- I think he got it right there you see around the corner thanks for coming on tonight -- -- Grammy up they can't you know.
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