The collapse in value of securities that packaged home loans from the riskiest borrowers led to a credit seizure starting in 2007 that sent the world’s largest economy into its deepest recession since 1933, from which it has yet to recover 3.23 million of the 8.74 million jobs lost. It also left financial institutions, including those with federal insurance, nursing billions of dollars of losses.
Wallison said the largest shareholder in Moody’s is Warren Buffett’s Berkshire Hathaway Inc. Buffett is an Obama supporter and his name is associated with a proposal to raises taxes on the wealthiest Americans promoted by the administration.
‘Peculiar Things’
“There are peculiar things about this particular lawsuit,” Wallison said. He said there’s no way to know for sure why S&P is alone in facing the U.S. lawsuit.
Buffett didn’t respond to a request for comment left with an assistant.
There is still the chance that Moody’s will be named by the government, Peter Tchir, founder of New York-based TF Market Advisors, said yesterday in a telephone interview. “It has to come at some point. It would be hard to say one guy was rating a AAA completely fraudulently but the other guy was fine.”
The Justice Department may sue Moody’s after the S&P case is tested in the courts, Reuters reported late yesterday, citing people familiar with the matter it didn’t name.
In September, Moody’s said it may join S&P in downgrading the U.S.’s credit rating unless Congress this year reduces the percentage of debt-to-gross-domestic-product during budget negotiations.
Holder and Associate Attorney General Tony West declined to comment on whether Moody’s is being investigated. White House spokeswoman Amy Brundage referred questions to the Justice Department.
‘Far From Clear’