And they apparently made good on that threat, the DOJ then filed a fraud lawsuit against the company.
Jan 21 (Reuters) – Former U.S. Treasury Secretary Timothy Geithner angrily warned the chairman of Standard & Poor’s parent that the rating agency would be held accountable for its 2011 decision to strip the United States of its coveted “triple-A” rating, a new court filing shows.
Harold McGraw, the chairman of McGraw-Hill Financial Inc, made the statement in a declaration filed by S&P on Monday, as it defends against the government’s $5 billion fraud lawsuit over its rating practices prior to the 2008 financial crisis.
McGraw said he returned a call from Geithner on Aug. 8, 2011, three days after S&P cut the U.S. credit rating to “AA-plus,” and that Geithner told him “you are accountable” for an alleged “huge error” in S&P’s work.
“He said that ‘you have done an enormous disservice to yourselves and to your country,’” and that S&P’s conduct would be “looked at very carefully,” McGraw said. “Such behavior could not occur, he said, without a response from the government.”
McGraw said he learned of Geithner’s concerns from a message left by a former subordinate at the Federal Reserve Bank of New York, where Geithner had been president in 2008.
The U.S. Department of Justice, which brought the civil fraud lawsuit, did not immediately respond to a request for comment. New York Fed spokesman Jack Gutt declined to comment.