Standard and Poor's is a credit agency. Its name has become fairly well known since the global credit crisis of 2008. Many countries around the world experienced an economic downturn during and following 2008 and many have not yet recovered.
Countries downgraded by agencies such as Standard and Poor's face crippling additional costs which add to their financial woes. In much the same way that hitting a person already beaten half to death can be the final nail in that person's coffin, credit agency downgrades have hit countries such as Greece and Spain hard.
These vague elitist organisations wield power. Too much power many would say. Most countries have had to put up with what credit agencies, the IMF and Germany's Angela Merkel have thrown at them. The US appears to see itself as somewhat different. The USA is to suing Standard and Poor.
Its 'beef' with the credit agency is that the country was not alerted to the pending financial doom in 2008, when the agency assessed mortgage bonds in2007. Instead in 2007 S&P highly rated mortgage-backed securities. The same ones that later collapsed in value.
The USA is launching a civil lawsuit, reports the BBC. If the lawsuit goes ahead it will be the first 'such case over alleged wrongdoing by a ratings agency tied to the financial crisis'.
S&P however claim that such a lawsuit has no factual nor legal merit. Various States are expected to sue also.
Late Monday the US Justice Department announced the lawsuit. The department accused the firm of ignoring 'its own standards to rate mortgage bonds that imploded in the financial crisis and cost investors billions', reports the WSJ.
U.S. Attorney General Eric Holder accused the New York company of S&P but the credit agency retaliated saying, 'the rating firm was being punished unfairly by the U.S. government for "failing to predict" the housing meltdown or financial crisis.'
Both sides have been in negotiations, which have so far failed to reach an agreement. S&P confirmed recipt of the lawsuit late Monday. They maintain the have done nothing wrong.
S&P will no doubt see their company's value fall dramatically following news of the legal action.
Updates in due course.
The USA was in many ways partly responsible for the economic woes of Europe. If they get a settlement will they pass this one to those in other countries hit by their failings? Of course the answer is no. The US administration has also already successfully sued various banks. Perhaps Europe needs to consider lawsuits against bankers, and the like, who have crippled the region.