Standard & Poor sees a whole lot of wrong in the $5 billion fraud lawsuit the U.S. government brought against it, and said as much Tuesday, when it alleged that the government issued this suit in “retaliation” for S&P’s decision to strip the nation of its “AAA” credit rating. They had decided at the time that the States had taken on too much debt, and were therefore more worthy of an AA-plus rating.
After all, they were the only major credit rating agency to demote America, and they are the only ones to be sued. So logically that must mean something, they seem to be saying. They claim the government’s “impermissibly selective, punitive and meritless” lawsuit was brought “in retaliation for defendants’ exercise of their free speech rights with respect to the creditworthiness of the United States of America,” as Reuters reported.They further claimed that the suit, which was filed with the U.S. District Court in Santa Ana, California, violated free speech as protected by the First Amendment of the U.S. Constitution, and also that it violated the “excessive fines” in violation of the Eight Amendment.
Not only that, but in Tuesday’s filing, S&P estimated that over $4.6 billion of the losses from CDO’s had to do with Bank of America Corp. or Citigroup, and that $1 billion come from debt that was never even issued.
Finally, S&P claimed the government lacked authority to sue under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, because federally insured financial institutions were unaffected by violations.
Nevertheless, Associate Attorney General Tony West says there is “no connection” between the downgrade of S&P and the lawsuit, which they say was investigated in November 2009.
Though S&P wanted the suit dismissed with prejudice, so that they would never have to hear from it again, on July 16, U.S. District Judge David Carter denied their bid to dismiss.