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2/25/14, "What Did Obama Tell Geithner about S&P?" Wall St. Journal, James Freeman
"The former Treasury secretary's famous call came five minutes after a meeting in the Oval Office."
"Last month we wrote about the threatening phone call from then-Secretary of the Treasury
Timothy Geithner
to the head of the parent company of Standard & Poor's after
S&P downgraded the U.S. credit rating in 2011. Now we learn that Mr.
Geithner placed the call to McGraw Hill Chairman and CEO Harold McGraw
III just five minutes after leaving an Oval Office meeting with
President Barack Obama.
This detail, drawing on information contained in Mr. Geithner's public
schedule, was included late yesterday in a filing by S&P in federal
court in the Central District of California. The Department of Justice
is suing S&P for $5 billion for alleged fraud in S&P's ratings
on mortgage-backed securities during the housing boom. But DOJ is not
suing the other credit rating agencies that issued similarly awful
ratings. Since only Standard & Poor's downgraded the U.S., S&P
says it is suffering from retaliation.
Yesterday's filing came in
response to government efforts to avoid turning over documents related
to the Geithner communication to S&P. According to a sworn affidavit
from Mr. McGraw filed with the court last month, Mr. Geithner "said
that 'you have done an enormous disservice to yourselves and to your
country', that the U.S. economy was bad and that the downgrade had done
real damage. S&P's conduct would be 'looked at very carefully' he
said. Such behavior could not occur, he said, without a response from
the government."
Along with stonewalling S&P's request for
staff documents surrounding this event, the feds are also refusing to
turn over material related to the giant banks that the government has
cast as victims for the purposes of winning this case against S&P.
The ratings firm wants to know if these firms really believed they had
been defrauded by S&P, but not by competitors Moody's and Fitch.
Since the government is the one suing for billions, we don't understand
how it can continue to prevent the defendant from gaining material
relevant to its defense." via Free Rep.
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