Standard & Poors, one of the major credit rating agencies, has done an interesting pivot in defining itself amidst a Justice Department civil suit. Like all the major rating agencies S&P is paid by those whose securities it rates. This, quite obviously, is a conflict of interest in how it rates securities because if it rates a financial security in a way the customer does not like the customer will likely look elsewhere for current or future business. This blatant conflict of interest is something the rating agencies, S&P included, have long denied – until now.

Big lawsuits are great opportunities to look at the state of mind of reporters, pundits and bloggers. I have posts on the case focused on the facts, the law and what they say about the Department of Justice. Of course, my biases are obvious: I think the DOJ refused to enforce the laws against fraud by Wall Street executives, that the refusal to investigate and enforce the law was a deliberate policy choice by President Obama, and that policy was intentionally put into practice by Attorney General Eric Holder and the head of the DOJ Criminal Division, Lanny Breuer. Others show their biases as well.

Despite the best efforts of Lanny Breuer to hide it, the complaint filed against Standard and Poor’s by Los Angeles US Attorney André Birotte, Jr. proves that the Department of Justice is fully aware of the corruption on Wall Street in the run-up to the Great Crash. The alleged facts point directly at the issuers of real estate mortgage-backed securities and collateralized debt obligations as the leading cause of the losses of the victims of S&P’s alleged frauds.

I discussed here the compelling facts alleged in the complaint against Standard and Poor’s filed by Los Angeles US Atttorney André Birrotte, Jr. Now let’s look the legal claims, and try to explain why there is no criminal prosecution.

The US Attorney for Los Angeles, André Birotte, Jr., sued Standard and Poors for wire fraud against financial institutions earlier this week. Thanks to FT Alphaville, we have a copy of the complaint. This is a fraud case, and the rules require that the circumstances showing fraud be alleged “with particularity”. The complaint is full of particularity, about 110 pages worth. You can get a good idea of the sense of the complaint from the table of contents. Let’s take a look at the alleged facts; I’ll have a separate post on legal stuff.

The Department of Justice has filed a civil lawsuit against Standard and Poors alleging that S&P engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs).

This week has seen the final jobs reports that will be available to make a possibly measurable impact prior to November 6. Wednesday’s report from ADP had 162K new private sector jobs. Yesterday’s (Thursday, October 4) Jobless claims report had a slight increase to 367K new jobless claims and 4 week rolling average of 375K new claims. Finally, today’s (Friday, October 5) Bureau of Labor Statistics report has an increase of 114,000 jobs for September and the jobless rate falling to 7.8%.

Why does Sarkozy make it a priority to please the unelected Americans at S&P?

A couple weeks ago, I sarcastically stated that the world’s credit agencies were starting to threaten multiple national credit downgrades as if they had a plan to leave the planet altogether.

We may be past sarcasm.

The ratings agency Standard and Poor’s is threatening another downgrade of the United States credit rating if the Super Committee doesn’t get results.