Arnold Kling makes some good points:
One way to view the period 2005-2009 is as a massive destruction of property rights by the government. First, they destroy the right of Freddie, Fannie, and commercial banks to maintain lending standards. Then they confiscate the property of holders of securities in GM and Chrysler to pay off the labor unions. Then they sell off AIG’s assets in order to bail out Goldman Sachs and several large foreign banks. And of course, the government has made every effort to keep banks from enforcing mortgage contracts, while extracting large fines from banks.
Here is Charles Rowley making a similar point:
The financial crisis was generated not by any rating agency, but by a cross-party political conspiracy to bludgeon mortgage companies to extend mortgages to minority households that had no resources to enter into home ownership. A crude vote-seeking frenzy ensued, fed by Fannie Mae and Freddie Mac, two government-enterprises that were shell agencies for a Ponzi scheme in the housing market.
All this is in the context of the US government suing S&P.
The problem is that S&P is not guiltless, after all as Charles Rowley tells us:
S & P’s error was ever to take credit guarantees emanating from the government with anything except supreme contempt.
But there is a lot of guilt to go around. In the first instance the Boston Fed has questions to answer. The authors of a paper published in the American Economic Review, the publishers of the American Economic Review, and many, many regulators should join S&P in the dock.
Substantial media and political attention was showered upon a 1992 Boston Federal Reserve Bank study of discrimination in home mortgage lending. This study concluded that, while there was no overt discrimination in banks’ allocation of mortgage funds, loan officers gave whites preferential treatment. The methodology of the study has since been questioned, but at the time it was highly influential with regulators and members of the incoming Clinton administration; in 1993, bank regulators initiated a major effort to reform the CRA regulations.
By singling out just S&P it looks a lot like pay-back for down grading US debt rather than a proper effort to bring the originators of the GFC to account.