By Henry McRandall
WRISEUP.COM
The recent announcement by the Unitied States Department of Justice (DOJ) that it was launching a probe into potential credit-rating-rigging by Standard & Poor’s was nothing more and nothing less than a brutal attempt to intimidate all three credit-rating agencies.
The move by the DOJ came hot on the heels of Standard & Poor’s announcement that it was lowering Uncle Sam’s credit rating from Triple-A to Double-A+.
The fact that demand for U.S. Treasuries actually increased after the Standard & Poor’s downgrade was due primarily to the initial reluctance of Moody’s and Fitch to also downgrade Uncle Sam’s rating.
And to punish Standard & Poor’s and send a powerful message to all three agencies, the DOJ immediately announced its probe into S&P.
The message was clear: Don’t mess with the credit rating of the United States government or face possible criminal prosecution for past crimes.
It is a poorly-kept secret that all three credit agencies were guilty of gross misconduct and likely criminality in their rating of the financial institutions peddling fraudulent subprime mortgages for several years leading up to the global economic meltdown of 2008.
And there was a powerful incentive for the three credit-rating agencies to give unjustifiably high ratings to a wide range of governments, financial institutions, corporations and financial derivatives: Their entire revenue came from the entities they were rating.
If they wanted their customers to continue paying them for ratings, they had to keep the ratings high enough to keep the customers coming back, even if the ratings were routinely kept far above their actual merit.
Why didn’t the DOJ act sooner, launching probes not only into S&P but also into Moody’s and Ficth? After all, it was evident even to the unwashed masses that many credit ratings were actually fraudulent and that these fraudulent ratings nurtured the United States housing bubble whose rupture brought down the entire gloobal economy?
It was for the same reason that no one was ever prosecuted at the fincial institutions for peddling fraudulent mortgages and derivatives.
It was for the same reason that no one from the George W. Bush administration was prosecuted for war crimes or crimes against humanity.
And it was for the same reason that no one from BP or Halliburton or TransOcean was ever prosecuted for the Gulf of Mexico oil-spill tragedy that killed 11 workers and devastated the livelihoods of thousands.
That reason is that the United States government has been – and continues to be – a silent partner in the rampant criminal activities of the financial institutions.
As long as everyone sticks to the script of everyone covering up everyone else’s shortcomings and sins, then no one will be prosecuted for any crimes, no matter how egregious.
But if one role player departs from the script and attacks another, then that role player must be brought down.