In my previous post I had a throw-away line about the pension funds suing the folks involved in the sub-prime scandal, including the credit agencies that fraudulently rated the toxic junk as "AAA+ investment grade". At which point the argument "Free speech! Free speech!" comes up.
But: There is no free-speech protection when it comes to matters of fraud. It is already known fact obtained via discovery of internal documents in current lawsuits that the ratings agencies were awarding investment grades to bonds that even analysts in the company thought were risky. It's hard to describe that as anything other than fraud.
The ratings agencies have spent a large fortune these past two years fending off legal and political attacks upon their fraudulent ratings. Fraud -- willful deceit -- is not free speech. Fraud is crime -- a crime in all 50 states of the United States. There are numerous lawsuits by pension funds -- including the massive CalPERS pension fund -- against the credit rating agencies for their complicity in fraud. The sad thing is that we're not seeing criminal prosecutions too. . The notion that credit agencies should be immune to prosecution when they are clearly complicit in fraud by awarding investment grades to investments THAT THEY KNEW WERE NOT INVESTMENT GRADE is as daft as the notion that a con artist should be immune to prosecution because the mark shoulda known that it was a con.
- Badtux the Legal Penguin