Remember back in 2011 when, during the first debt crisis, the U.S. lost its cherished “AAA” rating from Standard & Poor’s?
It shouldn’t be that hard to recall, seeing as the U.S. again teetered on the brink of self-imposed default just a few months ago, but at the time, losing the top credit rating was a pretty big story.
Now it seems it was a big enough story for then-Treasury Secretary Tim Geithner to allegedly call up Harold McGraw, the chairman of McGraw-Hill Financial (which owns S&P), and bully him over the phone, according to a new legal filing. Politico’s Jon Prior reports:
[McGraw] said that two days after this announcement, Geithner called and warned him that the ratings firm had made an error in its analysis and that “you are accountable for that,” according to a legal document filed Monday.
McGraw said in his deposition that an angry Geithner said on the call that S&P had made previous mistakes and would be “looked at very carefully.” McGraw added that Geithner told him “you have done an enormous disservice to yourselves and to your country” and that the downgrade had caused real damage to the struggling economy.
Geithner denied the charges to Politico through a spokesperson.
As Politico notes, the filing was part of S&P’s response to a Justice Department case. The DOJ says S&P defrauded investors in the run-up to the financial crisis by marking mortgage-backed bonds with its top rating. The whole financial system came tumbling down, of course, as the risk of those bonds became evident.
The S&P claims the case is retribution for that 2011 downgrade.