Courtesy of Pam Martens.
New Jersey Governor Chris Christie; Former U.S. Treasury Secretary Timothy Geithner
Just when it seemed that the ethical reputation of the U.S. government, now universally known as Bugs R Us by its closest allies, enemies and citizens alike, was at its nadir, along comes a court affidavit by Harold W. McGraw III, chairman of McGraw Hill Financial, parent of Standard and Poor’s rating agency.
The affidavit by McGraw, filed in a Federal District Court in California, seeks to bolster S&P’s position that the government is only suing it in retaliation for its downgrade of U.S. debt rather than meritorious claims that it fudged its credit ratings. The affidavit claims that former U.S. Treasury Secretary Timothy Geithner called McGraw in August 2011 and threatened to retaliate against S&P for downgrading the debt of the United States.
According to McGraw, Geithner was angry and accused S&P of making an error in calculating the basis for the downgrade, stating on the call “You have done an enormous disservice to yourselves and to your country.” Geithner warned further: “Such behavior would not occur, he said, without a response from the government,” according to the affidavit.
Interestingly enough, although Moody’s rating service was also handing out AAA-ratings to subprime-laden debt bombs in return for huge payments from Wall Street during the lead-up to the credit collapse, the government has only sued S&P among the rating agencies.
In the U.S. Justice Department’s lawsuit against S&P, filed in February of last year, the government alleges that the company “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors…” by falsely representing that its credit ratings were objective, when, in fact, they were motivated by a desire for increased revenue and building market share.
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