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Geithner Warned S&P Chairman US Would Retaliate For Downgrade

Tyler Durden's picture




 

Who can forget Tim Geithner's historic interview from April 2011, in which he said:

Peter Barnes “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”

 

Geithner’s response: “No risk of that.”

 

“No risk?” Barnes asked.

 

No risk,” Geithner said.

Considering that the US was downgraded by S&P just 4 months later, one person who certainly will never forget his idiotic preannouncement, is the former Treasury secretary, Tim Geithner. And being the sore loser that everyone suspected he was (although one hopes his recent well-paid move to Warburg Pincus will help soothe his sensitivity) it will come as no surprise that Geithner told the Chairman of embattled rating agency Standard & Poor's, that its downgrade of the US from AAA to AA+ "would be met by a response."

From Bloomberg:

S&P filed a declaration of McGraw yesterday in federal court in Santa Ana, California, as part of a request to force the U.S. to hand over potential evidence the company says will support its claim that the government filed a fraud lawsuit against it last year in retaliation for its downgrade of the U.S. debt two years earlier.

 

In his court statement, McGraw said Geithner called him on Aug. 8, 2011, after S&P was the only credit ratings company to downgrade the U.S. debt. Geithner, McGraw said, told him that S&P would be held accountable for the downgrade. Government officials have said the downgrade was based on an error by S&P.

 

“S&P’s conduct would be looked at very carefully,” Geithner told McGraw according to the filing. “Such behavior would not occur, he said, without a response from the government.”

 

The Justice Department last year accused S&P of lying about its ratings being free of conflicts of interest and may seek as much as $5 billion in civil penalties. The government alleged in its Feb. 4, 2013, complaint that S&P knowingly downplayed the risk on securities before the credit crisis to win business from investment banks seeking the highest possible ratings to help sell the instruments.

None of this somces as a surprise, and it has been well-known for a long time that the only reason the US Department of Injustice targeted only S&P and not Moody's or Fitch for their crisis era ratings of mortgages is precisely due to Geithner's vendetta with S&P. Of course, this kind of selective punishment simply means that nobody else will dare to touch the US rating ever again, or speak badly against the sovereign in a public medium for fears of retaliation.

Naturally, while this means that the credibility of the rating agencies is now non-existent even among the head in the sand groupthink, what is worse is observing the US' slide into the kind of totalitarian, 1st Amendment quashing tactics that worked out so well for all previous fascist regimes. 

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Tue, 01/21/2014 - 08:47 | 4351089 Dr. Engali
Dr. Engali's picture

.223 rounds are cheap....Just saying.

Edit...... Btw what is somces?

Tue, 01/21/2014 - 08:50 | 4351103 idea_hamster
idea_hamster's picture

So we can now rule out anyone in DC saying "This is the US -- we're not Argentina!"  (Well, at least not without some irony....)

Tue, 01/21/2014 - 08:57 | 4351119 HoofHearted
HoofHearted's picture

Later in the letter, Geithner reiterated..."Come on S&P. In fascism government and business work TOGETHER! Moody's and Fitch are on board..."

Tue, 01/21/2014 - 08:57 | 4351120 Obchelli
Obchelli's picture

If you want your taxes you can have your taxes

Tue, 01/21/2014 - 09:07 | 4351139 Stackers
Stackers's picture

Chicago politics at its finest

Tue, 01/21/2014 - 09:37 | 4351225 He_Who Carried ...
He_Who Carried The Sun's picture

What do you want?

Did the Jews invent democracy?

So...?

 

Tue, 01/21/2014 - 09:55 | 4351313 onewayticket2
onewayticket2's picture

...and yet the press - in an effort to cement Hillary 2016 - is still nearly wall to wall with some cones placed in the road in fort lee. 

 

Tue, 01/21/2014 - 10:41 | 4351440 I am more equal...
I am more equal than others's picture

 

 

 

Timmy needs to be invited to a White Party and his ass used as a pinata for all those throbbing penises. 

Tue, 01/21/2014 - 11:13 | 4351515 Handful of Dust
Handful of Dust's picture

So how many S&P execs went to the slammer for false or deceptive ratings?

Tue, 01/21/2014 - 11:56 | 4351636 Bunga Bunga
Bunga Bunga's picture

Nationalize Turbo-Tax!

Tue, 01/21/2014 - 12:15 | 4351688 LMAOLORI
LMAOLORI's picture

 

 

Jail is for the little people not the bankers or rating agencies they just pay bribes err I mean fines and holder and obama make all the nasty prison sentences go away.

Tue, 01/21/2014 - 11:15 | 4351521 Fish Gone Bad
Fish Gone Bad's picture

Apparently people have never patted a hungry dog eating a meal...  It will bite your hand off, even if you are a friend.

Tue, 01/21/2014 - 11:15 | 4351524 SeattleBruce
SeattleBruce's picture

And I quote: “This is the most transparent administration in history,”  Prez. Obozo

Tue, 01/21/2014 - 11:28 | 4351553 Oldwood
Oldwood's picture

I cannot believe they would do such a thing. But of course there is that IRS thing where they were kind of going after potential enemies. And there was that GM thing where they were threatening bondholders to go along with the 95% haircut....or else. And then there were those insurance companies who were putting out less than optimistic projections about costs relative to Obamacare that were told to STFU. There were all those guns they sent across the border and then fired the guys who told on them, but that's not retribution. They were just making an example of those who lacked loyalty. And yes there are other instances, but not Timmy. Say it ain't so. I'm simply hurt that I wasn't invited to the MLK/Michelle party celebrating the coup of the Tutsi tribe.

Tue, 01/21/2014 - 10:19 | 4351380 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

They sure know how to manipulate it. Short on Jews? whaaaaaa wait.

Tue, 01/21/2014 - 15:59 | 4352690 Silveramada
Silveramada's picture

..and, if you want to know who rules over you, just see who you are not allow to criticize....

Tue, 01/21/2014 - 10:41 | 4351436 Muddy1
Muddy1's picture

"The Justice Department last year accused the S&P of lying..."

If that's not the pot calling the kettle black I don't know what is.

I haven't missed seeing tiny Timmy's face at all.  Why did you have to bring his picture back?  YUK!

Tue, 01/21/2014 - 10:58 | 4351473 Ban KKiller
Ban KKiller's picture

Fallout among crooked banksters. Oops double negative. 

Tue, 01/21/2014 - 09:11 | 4351147 Gert_B_Frobe
Gert_B_Frobe's picture

Oh, come on. This is in no way retaliation. Comrade Zero and his lackies don't do retaliation.

Now closing some bridge lanes in Jersey ... that's retaliation. /sarc off

Tue, 01/21/2014 - 09:20 | 4351166 HoofHearted
HoofHearted's picture

Hi Sean Egan, wherever you are.

Tue, 01/21/2014 - 11:07 | 4351493 Offthebeach
Offthebeach's picture

Anyone seen Trotskys icepick around?

S&P, sleep with one eye open.

Wed, 01/22/2014 - 23:26 | 4357838 Buck Johnson
Buck Johnson's picture

We are Argentina, and it will get alot worse.  When this whole system collapses it will implode the US system of governance and law.  In fact I see where massive corruption and destitution will be along side enclaves of the rich and powerful to be the norm. 

Tue, 01/21/2014 - 08:59 | 4351127 Cognitive Dissonance
Cognitive Dissonance's picture

Yes, we have no bananas. But we do have a Banana Republic.

Tue, 01/21/2014 - 12:55 | 4351808 DaveyJones
DaveyJones's picture

I've already started wearing my underwear on the outside:

http://www.youtube.com/watch?v=EV4N2dk0cMk

Tue, 01/21/2014 - 09:40 | 4351233 firstdivision
firstdivision's picture

Btw what is somces?

An anagram for comess?  The extra 's' is to denote sarcasm.

Tue, 01/21/2014 - 09:49 | 4351281 drendebe10
drendebe10's picture

If you like your gummint tyranny, uou can keep your gummint tyranny.

Tue, 01/21/2014 - 10:22 | 4351387 GolfHatesMe
GolfHatesMe's picture

Free EGAN-JONES!

Tue, 01/21/2014 - 08:46 | 4351091 horot
horot's picture

Geithner is a sore loser. He should be grateful Billy Crudup portrays him in TBTF

Tue, 01/21/2014 - 11:19 | 4351530 Fish Gone Bad
Fish Gone Bad's picture

When a person is paid by someone, they do their bidding.  If a person does not want to be a bitch, then he shouldn't act like a bitch. 

Tue, 01/21/2014 - 08:45 | 4351092 CEOoftheSOFA
CEOoftheSOFA's picture

Right out of the Nazi play book.

Tue, 01/21/2014 - 10:30 | 4351406 PrecipiceWatching
PrecipiceWatching's picture

Or the Communists.

Same thing.

Leftist Totalitarians, all

Tue, 01/21/2014 - 10:51 | 4351458 Gene Parmesan
Gene Parmesan's picture

They're actually pushing fascism at this point.

Tue, 01/21/2014 - 10:36 | 4351427 DeadFred
DeadFred's picture

Considering Gitmo was an option I think they got off light.

Tue, 01/21/2014 - 08:45 | 4351093 enloe creek
enloe creek's picture

who cares

Tue, 01/21/2014 - 08:50 | 4351102 PlausibleDenial
PlausibleDenial's picture

I care... and I would like to squash that fucker if only I could find him.  Really did not need to see his rat face first thing this AM.  One day he will be sought out and when one of these banksters are hung then just maybe the other rats will run.... FMR

Tue, 01/21/2014 - 11:32 | 4351564 Fish Gone Bad
Fish Gone Bad's picture

One day he will be sought out

Short of the US being invaded by China and them rounding up all the banksters, this will NEVER happen in my lifetime.  Why?  Bankers pay for politicians, politicians control the military and police and all their toys.  The politicians then protect their mutualistic (http://en.wikipedia.org/wiki/Mutualism_%28biology%29) relationship. 

Getting mad about it merely draws attention to oneself.  Consider reading Dale Carnegie's How to Stop Worrying and Start Living (http://www.amazon.com/How-Stop-Worrying-Start-Living/dp/0671035975/ref=s...), because there is really nothing anyone can do to change it.

Google: cursing fish cafepress

Tue, 01/21/2014 - 11:31 | 4351566 prains
prains's picture

elbow

 

please pick up your participation ribbon at the short bus, they're waiting for you to leave

Tue, 01/21/2014 - 08:52 | 4351095 JustObserving
JustObserving's picture

"would be met by a response."

The immediate response was that the CEO of S&P, Deven Sharma, was forced to resign:

Deven Sharma (55), Indian-American president of credit rating agency Standard & Poor's, has resigned less than three weeks after his company found itself at the receiving end of the Obama administration's ire following its downgrade of the United States' credit rating from AAA to AA+.

S&P's announcement, that Mr. Sharma would be stepping down immediately and leaving the company at the end of the year, also follows reports last week that the U.S. Justice Department had initiated an investigation into the mortgage securities ratings allocation process at the McGraw-Hill subsidiary. In particular, authorities were said to be examining whether S&P “improperly rated dozens of mortgage securities in the years leading up to the financial crisis.”

S&P's downgrade of the U.S.' debt from AAA to AA+ on August 5, based on its perception that the deficit reduction measures agreed by the administration were insufficient to stabilise national debt, saw further market turmoil in its wake as the downgrade triggered a massive global sell-off.

http://www.thehindu.com/business/sp-chief-deven-sharma-resigns/article23...

We have the freest, fairest markets and rating agencies in the world.

Tue, 01/21/2014 - 09:07 | 4351140 disabledvet
disabledvet's picture

The irony is that the downgrade is/was probably good news. It showed there was risk to the QE "system" relative to the reality of how Government actually worked. It certainly got the "shut down crowd" shut up. Obviously the "wind down" crowd is now in full bloom as pretty much every Federal Program save Social Security will now be "commercialized." NASA, the Postal Service, the DOT, the DOE, the DOL, HHS...you name it...most of these folks "work from home" anyways. Some type of system to monitor the highway system will have to be set up...just get rid of "rubber hitting the road" and that will be it for pot hole fixing. Be interesting to see if the private sector can build there own Space Station actually.

Tue, 01/21/2014 - 09:16 | 4351159 new game
new game's picture

drone those bitchezz, you can't downgrade our fiat machine-worked fine for a 100 years.

whats a tril between cronies, hell we make life good for you! all transfers good,  really think we can't make good on our promisses?

all the military might says so.

tiiiiiiiiiimmmmmaaa, the man, back in the news-this shit show just never ends w/o more laughs.

jf funny

Tue, 01/21/2014 - 11:31 | 4351565 ChanceIs
ChanceIs's picture

Let us forget political affiliations. The best argument against the challenger (Romney/Republican in this case) being worthy of the office of the presidency was that he wouldn't/couldn't pummel the incumbent (Obama/Democrats in this case) with the fact that the debt had been downgraded.

The best argument that a college degree is worthless is that the debt downgrade wasn't deemed by the public to be the prime issue. It did happen to make it into the news.

The best argument that the press and government are in the hands of the banks is that the downgrade wasn't at least 5X the size story that the 9/11 terrorist attacks were.

The best metric of how screwed we are as a society is all of the above.

OBTW: f&@k Geithner

OBTW2: this what happens when you let a tax cheat be Treasury Secretary

Tue, 01/21/2014 - 08:47 | 4351096 Big Brother
Big Brother's picture

http://en.dagongcredit.com/

At least Dagong can "tell it like it is" without threat of being sued. 

(I'm not a paid endorser)

Tue, 01/21/2014 - 08:47 | 4351097 Bangin7GramRocks
Bangin7GramRocks's picture

That's why the shadow rulers love him. He looks like a meek nerd, but behind closed doors he is a criminal mastermind.

Tue, 01/21/2014 - 11:51 | 4351625 Richard Chesler
Richard Chesler's picture

Actually he looks like a weasel but your point is well taken.

Tue, 01/21/2014 - 08:48 | 4351099 Dre4dwolf
Dre4dwolf's picture

Criminals lol they are a funny bunch.

Tue, 01/21/2014 - 08:49 | 4351101 Deepskyy
Deepskyy's picture

Hell we bomb Pakistani weddings for shits and giggles.  Just THINK of what we will do to the S&P for such a slight.

Long Hellfires and Short burning banker corpses!

 

 

Tue, 01/21/2014 - 08:51 | 4351107 People'sRepubli...
People'sRepublicof CT's picture

same administration that claims not to know about IRS targeting, or NSA spying..."trust us, we will not misuse the massive amount of information we are collecting."

Tue, 01/21/2014 - 09:13 | 4351153 Gert_B_Frobe
Gert_B_Frobe's picture

Now PR, you know the media will give this the same level of coverage as they gave Christie

Tue, 01/21/2014 - 08:52 | 4351109 Calculus99
Calculus99's picture

Confidence comes from a warm and NATURAL feeling inside NEVER from constant announcements that all is great. Trying to manufacture confidence does serious financial damage to those mugs that believe the propaganda -  

http://www.zerohedge.com/news/2012-11-30/guest-post-lets-have-depression...

Do NOT follow this link or you will be banned from the site!