Just to close the loop on a farce I've written about a couple of times recently (here and here), please try not to be too impressed by the optics of the publicly announced $1.37 billion fine agreed to by Standard & Poor's to settle charges of inflating mortgage ratings. It's rubbish. And it means the day is coming soon when the new financial industry scandal/scam will unfold and screw millions of hard-working people.
The optics:
Standard & Poor’s, a rating agency accused of inflating its assessment of mortgage investments that spurred the 2008 financial crisis, said on Tuesday that it had agreed to pay $1.37 billion to settle wide-ranging civil charges from the Justice Department as well as 19 state attorneys general and the District of Columbia. S.&P. also signed a statement of facts that outlined its role in the mortgage crisis, but the ratings agency did not admit to wrongdoing, securing a major concession from the government.[emphasis added]
So, the big bad tough prosecutors at the Justice Department could not even hold the line on getting an admission of wrongdoing (as an aside, in a moment of unintentional hilarity, did you happen to notice that Loretta Lynch, who will probably replace Eric Holder, said during her confirmation hearing, essentially, that the Justice Department was doing a bang up job on being tough on Wall Street? HAHAHAHAHAHAHAHAHAHAHAHAHA).
To his credit, Ben Protess points out:
Not one top executive at S.&P., or any major Wall Street firm for that matter, was charged criminally for the misdeeds during the era.[emphasis added]
Oh, sure, this will wipe out the company's profits for a year--but, while that may annoy shareholders, it will mean zippo to the executives, who won't pay a cent of the fine nor suffer any other penalty.
It's par for the course: no jail time for the big fish, a few little fish get convicted and the bankers laugh all the way to the bank. And, remember, S&P is a company whose racket was, as an Australian court found, built around a culture that “deceived” and “mislead” investors.
I guess since no one is at fault for behavior that led to the financial meltdown, we probably should blame Bozo The Clown. Only Bozo The Clown could have screwed this up so badly.
What a farce.