S&P Under investigation bu US authorities


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Profile Dr Imaginario
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Message 1142006 - Posted: 18 Aug 2011, 10:03:44 UTC

New york Post just released the news that the S&P rating company is under investigation by the US Department of Justice.
Funny that the only rating company to lower the US debt Rate from AAA to AA+ is now under such a hard invetigation and probably the US government will find enough material to take them to court.
For me this is pure and simple retaliation. Is the way of Obama's saying don't mess with me...

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Message 1142009 - Posted: 18 Aug 2011, 10:34:36 UTC
Last modified: 18 Aug 2011, 10:38:50 UTC

It's to do with the mortgage ratings.

S&P and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.

Companies and some countries - but not the United States - pay the credit ratings agencies to receive a rating, the financial market's version of a seal of approval. Before the financial crisis, banks shopped around to make sure rating agencies would award favourable ratings before agreeing to work with them.

These banks paid as much as $100,000 (£60,000) for ratings on mortgage bond deals, according to the Financial Crisis Inquiry Commission, the Times said.
Critics say this business model is riddled with conflicts of interest.

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Message 1142060 - Posted: 18 Aug 2011, 14:23:07 UTC - in response to Message 1142006.

For me this is pure and simple retaliation. Is the way of Obama's saying don't mess with me...


Funny how we see two seemingly related topics and tie them together to draw a conclusion without proof.

Personally, I don't see the need for Obama to retaliate against S&P by bringing them to court. If Obama were such a retaliatory President, then he would have brought slander/libel cases against the entire "birther" movement (those claiming he wasn't a natural born citizen).

I also don't think Obama has that much pull to send the entire US Department of Justice after S&P.

I think the more likely conclusion to draw from this is that because of the credit rating downgrade, which is just an extension of the US economy going into the crapper, fingers will be pointed in every direction so that people/corporations have someone to blame for their failures.

In this case, I think the US DoJ is rightly looking into S&P's conflicting business model. One very important part that needs to come to light is that S&P has a policy of sovereignty which states that no company can have a higher credit rating than the nation they reside in, yet S&P rates 4 US companies with a AAA rating while the US sits with a AA+. In fact, they have made 109 exceptions in the past decade or less during this financial crisis - whatsupwithdat?

No retaliation here. S&P are just getting themselves into hot water because they seem to make up the rules as they go along, so long as it favors themselves or seemingly the companies that have paid them out.

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Message 1142065 - Posted: 18 Aug 2011, 14:32:31 UTC - in response to Message 1142060.

I don't have proof, as I'm just expressing an opinion which of course you have the right to disagree.
I also agree with you that President Obama is that kind of person, or have that kind of action line, however the momentum of the Investigation makes me wonder about it.
Again I agree, that the rating agencies, sometimes act by some rules that can be very unclear.
And for sure that the department of justice will find some ground to take them to court about this mortgage ratings that they have done.
I don't have any proof on this, but all organizations have dirt under their carpets, and S&P is not an exception, the question is if someone is willing to dig enough

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Message 1142067 - Posted: 18 Aug 2011, 14:38:02 UTC - in response to Message 1142065.

but all organizations have dirt under their carpets, and S&P is not an exception, the question is if someone is willing to dig enough


Good point, and it certainly suggests some relation to current events (i.e. the downgrading of the US credit rating). Though I still think it has more to do with the inevitable finger pointing, and S&P's recent actions simply put them into the "hot" seat faster than anyone else.

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Message 1142112 - Posted: 18 Aug 2011, 16:05:00 UTC

This all has to do with one thing. It is much easier for the DOJ to take one corporation into court rather than millions of liars for the fraud they did when they signed the loan papers.
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Message 1142155 - Posted: 18 Aug 2011, 17:47:05 UTC

It just seems to me that in recession, upturn, bust or boom, the only people consistently making money are the lawyers. Gotta be a message there somewhere.

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Message 1142223 - Posted: 18 Aug 2011, 19:33:43 UTC - in response to Message 1142112.

This all has to do with one thing. It is much easier for the DOJ to take one corporation into court rather than millions of liars for the fraud they did when they signed the loan papers.

It should have never gotten to a point where people that were clearly not eligible were allowed to sign anything. Banks and mortgage institutions need to only look at themselves when they make paper that is worthless and they know it going into the sale. Remember they are the ones that are guarantying that the individual was cleared to get a loan.
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Message 1142226 - Posted: 18 Aug 2011, 19:35:29 UTC

It should have never gotten to a point where people that were clearly not eligible were allowed to sign anything.


It's called commission.

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Message 1142295 - Posted: 18 Aug 2011, 21:36:54 UTC

just remember the song from the movie....
"...money makes the world go around..."
and money shouts, it dosent speak

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Message 1142296 - Posted: 18 Aug 2011, 21:40:34 UTC - in response to Message 1142295.

And money stutters <g>

just remember the song from the movie....
"...money makes the world go around..."
and money shouts, it dosent speak


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Message 1142298 - Posted: 18 Aug 2011, 21:42:01 UTC - in response to Message 1142112.

No, no - put the millions in jails -- gets us out of the unemployment slump <smile>.

This all has to do with one thing. It is much easier for the DOJ to take one corporation into court rather than millions of liars for the fraud they did when they signed the loan papers.


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Message 1142312 - Posted: 18 Aug 2011, 22:27:32 UTC - in response to Message 1142223.
Last modified: 18 Aug 2011, 22:28:07 UTC

This all has to do with one thing. It is much easier for the DOJ to take one corporation into court rather than millions of liars for the fraud they did when they signed the loan papers.

It should have never gotten to a point where people that were clearly not eligible were allowed to sign anything. Banks and mortgage institutions need to only look at themselves when they make paper that is worthless and they know it going into the sale. Remember they are the ones that are guarantying that the individual was cleared to get a loan.

Banks??? What part of a mortgage broker is a bank? Why do you think they were called sub-prime. No part of a bank ever saw them!

It was a wall street firm, now defunct, that should have caught on but "it was our most profitable line of business." They were making too damn much money to look at the total risk they were taking on. Since they were wall street they didn't have to prepare a risk report and pass it on to a regulator like a bank. Greed meet stupidity.

The other people who should have caught on were a couple of Government chartered loan companies, but they were forced by law to buy even junk. Nice social engineering law that was and still is. Oh I suppose S&P should have caught on if it wasn't lied to, but that now defunct wall street firm was the one paying S&P's invoice.

Radio commercials here are touting option ARM Super Jumbo's again, so it begins again as the laws still haven't been changed. SIGH! I thought there was supposed to be "Change."
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Message 1142429 - Posted: 19 Aug 2011, 2:50:28 UTC

By this investigation US government only blocking or warning two other rating agencies Moody's and other to rate down them. In complicated legal society this is most possible way of civilized tyrannical move.

But most european rating agencies already highly critical of US economy that while US agencies keep throwing down slower eu economies down to junk status their own economy is miraculously in perfect rating status against their real current position which proves that US rating agencies are some active political tools to play around with others.
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Message 1142441 - Posted: 19 Aug 2011, 3:34:32 UTC - in response to Message 1142429.

Of course the problem with the European rating agencies is that Euro zone finances are not exactly AAA either.



But most european rating agencies already highly critical of US economy that while US agencies keep throwing down slower eu economies down to junk status their own economy is miraculously in perfect rating status against their real current position which proves that US rating agencies are some active political tools to play around with others.


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Message 1142529 - Posted: 19 Aug 2011, 6:57:42 UTC - in response to Message 1142441.
Last modified: 19 Aug 2011, 7:20:55 UTC

Of course the problem with the European rating agencies is that Euro zone finances are not exactly AAA either.



But most european rating agencies already highly critical of US economy that while US agencies keep throwing down slower eu economies down to junk status their own economy is miraculously in perfect rating status against their real current position which proves that US rating agencies are some active political tools to play around with others.




That is true I'd say in realistic rating all G8 countries today either might BBB or BB status given their constant unstabilities and budget status in the past 24 months.

But according to S&P, Moody's and Fitch in their own words they are pretty much equal to God himself that they able to rate anything on this planet on their own ways. But current events proving otherwise.
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Message 1142625 - Posted: 19 Aug 2011, 16:05:11 UTC

The Eurozone has the finance capability of paying the debt.
When you have a common currency the country no longer controls liquidity so the money must come from the EU Central Bank.
Is like in the US, one of the solutions for the crisis will be flood the economy with currency.
However the president of UE central bank as a different point of view. He is more interes in controlling inflation at all costs, even if it just blocks EU Eurozone Economy from growing.
The Euro is artificially high against the us dollar, this is causing problems one is with the price of oil, as the oil coutry producers try to compensate the FX effect by keeping the oil barrel overpriced other as to do with the export growt, as Euro is to high, exports will be more expensive. for small coutries like mine, that don't export a lot of high added value products this iskilling our industry and economy.

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Message 1142629 - Posted: 19 Aug 2011, 16:15:43 UTC - in response to Message 1142625.

As does the US -- but both entities have political problems. For the Eurozone not only do you have a number of countries with very real debt issues, but also, because of the structure of the EU, the ability to deal with the problems is constrained by the requirement of multi country consensus. You can add to that the issue of an aging population which requires an increasing proportion of the various national budgets to support that population. It would be far worse in the EU if they had the vastly more expensive and less effective for profit health care industry that mars the US financial picture.

For the US, the seriously broken political environment which includes one exceptionally clueless political party (particularly on financial matters) that seeks power by disruption, makes for a very cloudy economic picture (and therefore a difficult budget picture). Add to that the seriously expensive for profit health care 'system' and, even though the demographics of the US are not as bad as that of Europe (in terms of the aging of the population), there are significant challenges, which absent demonstrable political will (or rather, the intentionally disruptive political *won't*) make for a dismal picture.

The Eurozone has the finance capability of paying the debt.


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Message 1142640 - Posted: 19 Aug 2011, 16:41:28 UTC
Last modified: 19 Aug 2011, 16:43:56 UTC

s&p gave Countrywide a AAA rating months before the subprime market inploded
in 2008. where was the exhaustive research?

Since then Bank of America bought the hobbled Countrywide.
in the last few days Bank of America was sued for 6 billion for what the plaintiffs called Countrywides untruthfulness in the subprime market.

had S&P actually done the research they said they did would the mess been discovered earlier? maybe.

speaking of momentum of the investigation.....2008 to 2011 three years its taken....thats some slow momentum...especially to the retirees that lost
their investments and savings when the economy tanked.
S&P's rating system has long been suspect, there are
other rating agencies that did not downgrade US debt.

Moody's for one actually downgraded some of the subprime mortgage lending companies in 2006. where was S&P at this time? taking "commissions"...
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Message 1142645 - Posted: 19 Aug 2011, 16:59:24 UTC

Hum...
http://articles.latimes.com/print/2004/jan/07/business/fi-countrywide7
2004 Countrywide changes auditors ...

2007-8 S&P uses reports of [allegedly independent] auditors and SOX financial reports to base a AAA rating ...

The question is were they [KPMG] just incompetent or were they in on it?

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