Under Attack, Credit Raters Turn to the First Amendment

[Are_grits_groceries]

For two decades, the nation's top credit rating agencies have managed to fend off a crackdown from Washington by relying on a surprising ally - the First Amendment.

Despite their key role in the most recent economic calamity, the three big bond raters--Standard & Poor's, Moody's and Fitch--seem poised to do it again. With help from two of the most storied constitutional lawyers in the country, the raters have successfully argued that when they make a mistake -- say, awarding the top triple-A grade to a multibillion-dollar bundle of bonds that later default -- they cannot be sued or held accountable.

That's because ratings are opinions, the agencies claim, protected by the constitutional right to free speech.

Read more at: http://www.huffingtonpost.com/2009/10/28/under-attack-credit-rater_n_337712.html

Then their ratings should be advertised as opinions. People should be given information in plain english that states that these are the best OPINIONS by the people at the company.

They have managed to work their way deeply into the financial system. The ratings are used as a measure of both a bond's value and stability.

[depakid]

1. The first Amendment doesn't protect fraud

or crimes like making false statements to federal officials.

[Robb]

7. Yep. Seems simple to me. nt

[NC_Nurse]

2. Free speech isn't being paid for right? These companies were paid by the

entities they were SUPPOSED to be rating. Gamed system, end of story. Bribery doesn't count as free speech, does it?

[ProgressiveProfessor]

9. I think you missed the concept

I have a right to an opinion, and can publish it if I please and have the resources. If people choose to pay me for it, that does not change my free speech rights. In that regards, the rating services are are no different than a newspaper, and the raters are no different than journalists.

Now if I am being paid for independent expertise, advice, counsel, then there is a case against the raters and the service, but it has nothing to do with first amendment rights

[NC_Nurse]

12. Well, theres a definite conflict of interest which makes "free speech" a dubious

argument. That was my point. There ratings aren't supposed to be based on opinions, but on data.

[ProgressiveProfessor]

13. The free speech issue is not dubious at all

For another example, look at the anti spam blocklists. Absolute first amendment protections

[no_hypocrisy]

3. First Amendment doesn't protect fraud for credit reports and histories.

[ProgressiveProfessor]

10. Partially it does

I can print and take subscribers for just about anything. That's first amendment. When I get sell my products and are hired as an independent and objective source and I am not, that is fraud.

[no_hypocrisy]

11. But the First Amendment doesn't exonerate you from using fraud to your advantage.

[RC]

4. Another consequence of person-hood for corporations.

Free speech, hell, gambling with other peoples money is what it is. They have gamed the system so they can't lose. If something goes sour, the customer loses the money. If the customer wins, they charge more in fees.

[Sherman A1]

5. Agreed

and well said!

[JHB]

6. So they're saying they're really "Wild-Ass Guessing Agencies"?

In that case, henceforth in every usage (in writing, radio, or TV) they should be referred to by exactly what they are claiming to be.

"This IPO has been given a triple-A rating by Moody's Wild-Ass Guessing Agency"...

"The Standard & Poor's Wild-Ass Guessing Index is down by 16 points"...

You get the idea. Now repeat. Constantly.

Hammer them with their own horseshit.

[rucky]

8. They just devalued their own ratings as a service.

if that was any more possible.

[sendero]

14. Exactly....

.... after the current economic fiasco the ratings agencies have the credibility of a used car salesman, i.e. none.

Whatever they do in the courts is irrelevant, nobody puts any stock in their ratings any more anyway.