'Poor' standards

Posted Thursday, Feb. 07, 2013  comments  Print Reprints
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In response to Tuesday's article, "U.S. expected to sue Standard & Poor's": In 1995, the Clinton administration redefined the Community Reinvestment Act, which had been signed into law in 1977 by President Carter. This forced the banks to make risky loans to get their good ratings from the government's standardized computer scoring system.

So the banks made riskier loans.

Then, these riskier loans were bundled with many low-risk loans and sold by Fannie Mae and Freddie Mac to bond buyers as investments.

All these risky investments caught up with our country and created the housing bust of 2008. Thus, in 2011, Standard & Poor's Ratings Services downgraded the U.S. credit rating.

Now, the height of hypocrisy: Our U.S. Justice Department is suing Standard & Poor's, alleging that it gave improperly high ratings to these mortgage debt bonds that allegedly helped fuel the financial crisis of 2008!

Unbelievable.

Can we wipe the slate clean and start over in Washington?

-- Ken Terrell,

Saginaw

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