Report: Tim Geithner threatened S&P after it downgraded America’s credit rating in 2011

posted at 6:01 pm on January 22, 2014 by Allahpundit

My favorite part of this is a DOJ official wondering why no one had made this allegation publicly until now, more than two and a half years after it supposedly happened. Any theories on why a business that had already been threatened by a cabinet member but couldn’t prove it might want to keep mum lest it piss him off further? How many minor or major threats are government officials involved in daily, do you suppose, and how many get reported? (Timothy Carney cites a few examples from Hopenchange’s first term in his post about this.) Sometimes they don’t even bother to hide it: Remember, one of the reasons HHS was able to “convince” insurance companies to start moving ObamaCare deadlines around is because Sebelius threatened to boot companies from the exchanges next year if they didn’t comply. When you can strong-arm private industry in public, without fear of reprisal, that’s when you know you’re on the road to a de facto, if not de jure, government takeover.

Not all cabinet officers are so lucky, though, so some have to resort to this:

Harold McGraw, the chairman of McGraw-Hill Financial Inc, made the statement in a declaration filed by S&P on Monday, as it defends against the government’s $5 billion fraud lawsuit over its rating practices prior to the 2008 financial crisis.

McGraw said he returned a call from Geithner on Aug. 8, 2011, three days after S&P cut the U.S. credit rating to “AA-plus,” and that Geithner told him “you are accountable” for an alleged “huge error” in S&P’s work.

“He said that ‘you have done an enormous disservice to yourselves and to your country,’” and that S&P’s conduct would be “looked at very carefully,” McGraw said. “Such behavior could not occur, he said, without a response from the government.”

There was in fact an error — a $2 trillion one — in S&P’s calculations related to the downgrade, but the company swore afterward that it didn’t affect their decision to drop the U.S. from AAA to AA+. Meanwhile, a few days after Geithner’s phone call, news broke about the SEC launching a preliminary investigation of S&P for insider trading related to the downgrade assessment. Geithner himself was scathing about the company when he addressed the downgrade publicly. Now they’re being sued by the feds for fraud. Maybe those things are unrelated or maybe not — even S&P probably doesn’t know for sure — but this is why scrupulous government officials tend not to dial up antagonists to warn them they’re being “looked at.” Given the power they wield, it’s easy to draw the wrong conclusion about retaliation even if it’s not intended. You don’t suppose a mellow, easygoing guy like Tim Geithner intended it, do you?

By the way, it was the first debt-ceiling standoff between the parties in 2011 that helped trigger that downgrade. According to Jack Lew’s letter to Boehner today, the next standoff is coming next month. I wonder if S&P’s learned its lesson.


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Vote for/against the policies…not the person.
 
verbaluce on January 21, 2014 at 1:30 PM

rogerb on January 22, 2014 at 6:02 PM

The Chicago Way.

trigon on January 22, 2014 at 6:04 PM

why no one had made this allegation publicly until now, more than two and a half years after it supposedly happened

Because they took the threat seriously…

right2bright on January 22, 2014 at 6:06 PM

Geithner himself was scathing about the company when he addressed the downgrade publicly. Now they’re being sued by the feds for fraud

 

“If you like your doctor, you can keep your doctor. If you like your health care plan, you can keep your health care plan.”

 

“If you like the plan you have, you can keep it. If you like the doctor you have, you can keep your doctor, too. The only change you’ll see are falling costs as our reforms take hold.”

 

“No matter how we reform health care, I intend to keep this promise: If you like your doctor, you’ll be able to keep your doctor; if you like your health care plan, you’ll be able to keep your health care plan.”

 

“If you like your doctor or health care provider, you can keep them. If you like your health care plan, you can keep that too.”

rogerb on January 22, 2014 at 6:06 PM

By the way, it was the first debt-ceiling standoff between the parties in 2011 that helped trigger that downgrade. According to Jack Lew’s letter to Boehner today, the next standoff is coming next month. I wonder if S&P’s learned its lesson.

Standoff? What standoff?

Boehner will say that the US will not default on its debts, and that there will not be another government shutdown.

After a little Kabuki, the GOP will cave.

Wethal on January 22, 2014 at 6:09 PM

Meanwhile, a few days after Geithner’s phone call, news broke about the SEC launching a preliminary investigation of S&P for insider trading related to the downgrade assessment.

I guess this latest story is only news because it confirms what we all knew anyway? As soon as I heard about S&P’s downgrade, I told my wife they were going to get hammered by O. And when the SEC investigation was announced, she just looked at me and shook her head. Sometimes she hates how right I am. ;-)

Anyone with two brain cells to rub together knew what was going down. And what will continue to go down, on larger and larger scales.

We don’t live in a representative democracy anymore. Haven’t for years. It is a technocratic autocracy, worming its way none-too-gracefully into a full-blown fascist state. Pretty soon, the oligarchs in Russia are going to be looking at us and wondering how they missed out on all the fun….

nukemhill on January 22, 2014 at 6:11 PM

Mussolini with hair. ll Douche.

DFCtomm on January 22, 2014 at 6:11 PM

Threats from this regime? Not exactly a surprise.

I’ll see it as newsworthy when someone from this regime finally gets sent to prison.

dentarthurdent on January 22, 2014 at 6:13 PM

Vindictive. The behavior of gangsters.

thatsafactjack on January 22, 2014 at 6:13 PM

Any theories on why a business that had already been threatened by a cabinet member but couldn’t prove it might want to keep mum lest it piss him off further?

Gibson Guitars ?

burrata on January 22, 2014 at 6:14 PM

Cue the media jumping all over this S&P gate!!!!…..oh wait…..never mind

Caseoftheblues on January 22, 2014 at 6:14 PM

Wasn’t one of the big lessons of the financial crisis that we had to be sure rating agencies weren’t wrongly giving assets triple-A ratings, influenced by factors other than their true value?

calbear on January 22, 2014 at 6:17 PM

Fascist States of America.

rbj on January 22, 2014 at 6:18 PM

The day the DOJ filed suit I said it was retaliation. It was obvious.

Wigglesworth on January 22, 2014 at 6:18 PM

Disgusting, but not surprising.

22044 on January 22, 2014 at 6:19 PM

Wasn’t one of the big lessons of the financial crisis that we had to be sure rating agencies weren’t wrongly giving assets triple-A ratings, influenced by factors other than their true value?

calbear on January 22, 2014 at 6:17 PM

Well, ya, but NOT for the gubmint!!!!!

dentarthurdent on January 22, 2014 at 6:19 PM

Report: Tim Geithner threatened S&P after it downgraded America’s credit rating in 2011

.
Natchallie !!!!!!! Remember kids, only Democrats can do this with impunity! When Republicans do it (even when entitled to do so, as in the eight whiny AUSA attorneys dismissed for refusal to implement the president’s policies) it is a moral lapse sufficient to end the republic if permitted to go unchallenged. So remember the lesson, kids: Democrat = LIAR!

ExpressoBold on January 22, 2014 at 6:22 PM

Standoff? What standoff?

Boehner will say that the US will not default on its debts, and that there will not be another government shutdown.

After a little Kabuki, the GOP will cave.

Wethal on January 22, 2014 at 6:09 PM

You are correct except on one point. The GOP did away with even the Kabuki a few years ago. Now it’s just Ready, Set, Cave.

Spliff Menendez on January 22, 2014 at 6:26 PM

You don’t suppose a mellow, easygoing guy like Tim Geithner intended it, do you?

Ofcourse not,
you gotta be mean looking and armed , like those nation of islam thugs outside polling stations in PA ,
to have such intentions
;-)

burrata on January 22, 2014 at 6:26 PM

Most people resent others who make decisions, so Obama doesn’t make decisions.

The antithesis of Obama is this:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

right2bright on January 22, 2014 at 6:29 PM

Any theories on why a business that had already been threatened by a cabinet member but couldn’t prove it might want to keep mum lest it piss him off further?

Even if you stay quiet, they’ll get you if you refuse to go along, like Bank of America and TARP. Want to guess why BoA, and no other bank, is getting hit with all these lawsuits they have to settle for billions?

Wethal on January 22, 2014 at 6:29 PM

Ooops, I posted the last post in the wrong thread…

right2bright on January 22, 2014 at 6:35 PM

Even if you stay quiet, they’ll get you if you refuse to go along, like Bank of America and TARP. Want to guess why BoA, and no other bank, is getting hit with all these lawsuits they have to settle for billions?

Wethal on January 22, 2014 at 6:29 PM

Exactly…

right2bright on January 22, 2014 at 6:35 PM

Dope ‘n Change would have been so much better.

Schadenfreude on January 22, 2014 at 6:38 PM

They were also threatened ahead of the downgrade.

Schadenfreude on January 22, 2014 at 6:39 PM

The obama administration otherwise known as ” The League of Extraordinary Petty Dictators”.

tim c on January 22, 2014 at 6:40 PM

Now it’s just Ready, Set, Cave.

Spliff Menendez on January 22, 2014 at 6:26 PM

With Boehner there, it’s more like Ready, Cave, Set….

…and the real debate in the caucus was if there was enough support to go right to ‘cave’.

We’ve seen actions like this by the Obama Administration since pretty much the start in January 2009 – remember the GM Chairman who was sacked by order of the President because he wasn’t fully onboard for the TARP expansion to bailing out GM and Chrysler?

This is what is so humorous with the lapdog media and their prancing about over Chris Christie and ‘Bridgegate’ and ‘Hoboken-gate’. The double-standard / hypocrisy regarding when an abuse of power is a story and when it is not clearly highlights the complete bankruptcy of much of the Fourth Estate.

Athos on January 22, 2014 at 6:43 PM

Clearly, Bridge lane closings are far more serious a charge.

portlandon on January 22, 2014 at 6:46 PM

But Chris Christie shut down a bridge or something!!!!!!11!!! /sarc

KS Rex on January 22, 2014 at 6:55 PM

Keep voting democrat!

Murphy9 on January 22, 2014 at 7:12 PM

…they are out of control…and the MSM is also responsible!

KOOLAID2 on January 22, 2014 at 7:24 PM

Not only did they try to blame this on S&P, five years ago, they tried to blame S&P for not predicting the September 2008 crashes.

Right, if we all knew, we would have got our money out of Bear Stearns, I guess. We would have told the banks not to make those loans too. Oh, well, we did know that was a bad idea, just not how bad.

You can’t convince me that anyone in this administration is remotely interested in how the S&P industries are doing…unless it has to do with hip hop artists.

Fleuries on January 22, 2014 at 7:26 PM

Lil’ Timmy. Weaselhood, raised to an (ugly) art form.

Why nobody in grade school shoved his head in a toilet until the bubbles stopped remains one of the great mysteries of recent American history.
And one of history’s great missed opportunities.
Just saying.

orangemtl on January 22, 2014 at 7:33 PM

I am sure that MSNBC will devote a week of coverage to this now.

cat-scratch on January 22, 2014 at 7:37 PM

And the administration keeps on keepin’ on. They are dictators. There is no wanna be anymore. They change laws on a whim. They attack private industry. This administration does whatever it wants, whenever the hell it wants. Tell me where they haven’t. The only thing that keeps them from coming after private citizens, is the Second Amendment. Don’t worry though, obama is ending all those evil wars in the M.E. and bringing troops home.

JAGonzo on January 22, 2014 at 8:45 PM

Old news barely reported at the time…govt threatened to pull all their records/books & go after them…

S&P warned Obama he HAD to take a serious action to show he thought deficit explosion was a threat or the downgrade would happen. Obama ignored S&P, $crewed Boehner by rejecting almost all of his budget cut proposals, but announced he cut billions in spending. There were no cuts – he just promised Boehner he would not spend ALL of the stimulus money, some of which he still had. To make himself look good Boehner told the American people that was all spending cuts Obama agreed to. 2 weeks later Obama told Americans this is what happened, & to all paying attention Boehner looked like a liar / scam artist. S&P was not amused & followed up on their promise. Again, OLD NEWS.

easyt65 on January 22, 2014 at 8:50 PM

Almost $25 BILLION has been extorted from JPMorganChase after Jamie Dimon went public with complaints about excessive regulations.

rockmom on January 22, 2014 at 11:52 PM