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Il Giornale, Italy

Revenge or Justice?
Fines for Subprime
Mortgages Aren’t Convincing

By Marcello Foa

Has Obama truly launched an attack on the financial sector by suing Standard & Poor's over subprime mortgages? Doubtful.

Translated By Joanna Hamer

6 February 2013

Edited by Daye Lee

Italy - Il Giornale - Original Article (Italian)

Has Obama truly launched an attack on the financial sector that Obama by suing Standard & Poor's over subprime mortgages? Doubtful. Let's see why.

S&P, Fitch, and Moody's all incorrectly gave AAA ratings to subprime mortgages when they were junk bonds. However, only S&P has been indicted. Why the discrimination? The White House has not been able to provide a convincing answer, yet anyone who has a good memory will remember that in 2011, S&P dropped the rating of the American public debt for the first time, provoking a violent reaction from the U.S. government — so brutal that the other two agencies dismissed the temptation to do the same.

Two years later, only S&P is hit by a dramatic lawsuit in response to acts committed five years earlier. If this were true justice, it would have affected all agencies indiscriminately. Instead, the question arises: is this a settling of scores?

And again, why a civil lawsuit and not a criminal one? If these acts were so serious, they should require a trial, and a large one, with defendants not only from the rating agencies but from the major American banks as well. We already know what happened during the subprime mortgage crisis, and the investors, banks and investment funds have been let off on a grand scale. The pain is definitely there. But in five years, not even one criminal case has been initiated against the big bankers of Wall Street, and it was the Obama administration that justified this incredible passivity with arguments that even The New York Times, a newspaper certainly not hostile to the president, deemed laughable. Perhaps it is because this administration is riddled with big business lobbyists?

The impression— unpleasant for a great country like the U.S. — is that the elites of the financial world enjoy immunity from criminal actions, according to an unwritten rule that applies only if it is violated or if there are no set precedents. And then a civil lawsuit is brought against those few who are called to account for their actions, with a phantasmagorical claim for compensation ($5 billion) that makes sensational headlines. This gives the impression that justice is being done, while in fact it leaves protected that small, immune caste: the super-bankers of Wall Street.

This creates a lot of concern for anyone following these stories with disenchantment.



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