Monitored Alarm Systems

So just a few weeks after the S & P 's (overhyped) downgrade of U.S. debt, a story leaks that the Justice Department investigated the S & P' s rating system. The reports say that the Justice Department began an investigation before the downgrade - which I absolutely believe to be true. He also notes that the focus on conflicts of interest and a quote from an S & P's managing director is not to kill about "the golden goose."

But here 's the right thing. The timing of the message of the information out is certainly debatable. Even if the investigation into mortgage debt is not government debt, and even if it started before anything, are only there with as soon as a clear opportunity for credit rating agencies appear: Downgrade the government, and we 'll ramp our investigation of you. If an action like this give Moody 's or Fitch break before its ratings on U.S. debt? The report notes that it 's "unknown" if only S & P is examined, or if all three, which certainly seems like fair warning: downgrade us and we' expire ll some dirty laundry.

As for the legitimacy of the investigation again, it all seems to go back to the fact that these companies are seeing ratings - partly due to U.S. regulations - as gospel fact, and not just another opinion on value. That 'sa problem. Maybe there 'sa case made that S & P \ be' s ratings people believe one thing while another says publicly, and that can be turned into a fraud claim, but it seems like it would be can be a difficult case . A rating is still an opinion and an opinion is free speech protected. Getting over the hurdle is possible But difficult. It seems like a much more effective way to deter S & P to stop the system is to force companies to stop treating their ratings as gospel. I would bet that would do much more damage than any lawsuit or criminal action against the company or its execs do.

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