For Immediate Release
Government Caves in S&P Fraud Suit: Wall Street Escape From Accountability Virtually Ensures More Wrongdoing, Another Financial Crash
WASHINGTON - Note: Today, the U.S. Department of Justice (DOJ) announced a settlement with Standard & Poor’s (S&P), which will pay $1.5 billion to resolve lawsuits over its mortgage securities ratings. The U.S. had sued S&P, accusing it of weakening its rating criteria to gain more business in the years before the 2008 financial crash. Below are statements from two Public Citizen experts.
Robert Weissman, president, Public Citizen:
“The job of credit ratings firms is to protect investors by providing accurate and independent analysis. The statement of facts in the S&P settlement shows not that the company made good-faith mistakes in the run-up to the financial crash, but that it compromised its independence and deceived investors. Yet today, S&P settles without even an admission that it violated the law, and with no prospect of subsequent criminal prosecution. Is the public supposed to take solace in S&P agreeing to comply with state consumer protection laws and respond in good faith to requests for information from state enforcement agencies? The doctrine of too-big-to-jail is alive and well at the Department of Justice. The Wall Street escape from accountability virtually ensures a repeat of the widespread wrongdoing leading up to the financial crash.”
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Bartlett Naylor, financial policy advocate, Public Citizen’s Congress Watch division:
“What may be Attorney General Eric Holder’s last Wall Street case may be his worst. Millions of Americans lost their homes, jobs and retirement savings because of the frauds of credit rating agencies. Yet the DOJ’s treatment of Wall Street remains a broken record in every way. Despite asserting a large-scale fraud, the DOJ settlement means no individual is going to jail. S&P remains in business. Taxpayers will subsidize the penalty. And S&P can claim it violated no law. Finally, Holder dives in a rabbit hole after an extraneous claim by the firm that the government suit constituted retaliation for S&P downgrading U.S. securities. Whether the DOJ wasted any leverage in the settlement to secure the company’s retraction of the retaliation claim deserves congressional oversight, as do other the DOJ miscarriages of Wall Street fraud settlements.”
Public Citizen is a national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress, the executive branch and the courts.