Standard & Poor's Ratings Lawsuit - David Leonhardt

  • Aired:  02/14/13
  •  | Views: 10,490

The New York Times Washington bureau chief David Leonhardt discusses S&P's defense, private bank suits and the AIG bailout. (3:43)

[LAUGHTER]

POINT IS, I BELIEVE WHEN IT COMES TO OUR ECONOMY, THERE ARE THINGS WE JUST SHOULDN'T KNOW.

HERE TO KNOW THEM AT ME IS FINANCIAL WRITER AND WASHINGTON BUREAU CHIEF OF THE "NEW YORK

TIMES," DAVID LEONHARDT.

DAVE, GOOD TO SEE YOU AGAIN.

HOW ARE YOU?

[CHEERS AND APPLAUSE]

YOU ARE THE AUTHOR OF NEW E-BOOK "HERE IS THE DEAL" AVAILABLE ON ELECTRONIC EVERYWHERE.

DAVE, WHY ARE THEY GOING AFTER S&P?

DO THEY HAVE THE GOODS ON THE AGENCIES IN.

>> THEY MAY HAVE THE GOODS.

THE HUGE HOUSING BUBBLE AND THE BANKS WERE PACKAGING TOGETHER THE MORTGAGES.

>> CAUSED BY POOR PEOPLE BEING GREEDY GO.

HEAD.

>> AND S&P COMES IN AND SAID THEY ARE AAA RATED THEY CANNOT GO BAD AND THEY ARE PERFECTLY SAFE.

THEY DID GO BAD.

THE GOVERNMENT HAS E-MAILS WITH STANDARD & POOR'S TELLING HOW THEY RATE THE THICKS.

THEY LOOK BAD.

IS IT CRIMINAL?

THEIR DEFENSE IS THEY ARE NO DIFFERENT FROM JOURNALISTS.

>> WHY NOT PUT FINANCIAL WRITERS LIKE YOU IN JAIL FOR TELLING US THINGS ARE BAD WHICH UNDERMINES

CONSUMER CONFIDENCE?

[LAUGHTER]

>> SO BACK THEN THERE WERE A LOT OF JOURNALISTS OUT THERE WHO TRIED TO ARGUE THAT HOUSING WAS

IN A BUBBLE AND STANDARD & POOR'S WAS ONE.

>> Stephen: WERE YOU ONE OF THEM?

>> I WAS.

>> Stephen: WHOOPDIDO.

>> THEY SAID PRICES CAN NEVER GO DOWN.

>> Stephen: IF WE GO AFTER THE RATINGS AGENCY, ISN'T THE NEXT THING TO GO AFTER THE BANK?

>> THEY ARE GOING AFTER SOME BANKS.

>> Stephen: AND HOW?

>> THERE HAVE BEEN PRIVATE SUITS GOING AFTER BANKS.

THE GOVERNMENT HAS NOT EXACTLY PUT A LOT OF BANKERS IN JAIL.

>> Stephen: ANY.

>> MAYBE NOT ANY ACTUALLY.

>> Stephen: OKAY.

THAT'S A FAIRLY LOW NUMBER.

>> IT'S A LOW NUMBER.

HARD TO GO MUCH LOWER.

>> Stephen: YEAH, OKAY.

NOW --

[CHEERS AND APPLAUSE]

THICKS ARE DIFFERENT NOW THOUGH THAN IN 20072008, RIGHT?

>> THEY ARE A LITTLE BIT DIFFERENT.

>> Stephen: BACK THEN IT WAS TOO BIG TO FAIL.

ARE THEY THE SAME SIZE?

>> BANKS ARE PROBABLY ALWAYS GOING BE TOO BIG TO TOO FAIL.

THAT IS THE MISERABLE THING ABOUT THIS.

A MD YEARN ECONOMY NEEDS BANKS AND PROBABLY NEEDS BIG BANKS.

>> Stephen: IF THEY ARE TOO BIG TO FAIL AND EVIDENTLY TOO BIG TO JAIL, DO ANY LAWS APPLY

TO BANKS?

>> THEY ARE SUPPOSED TO AMY TO BANKS WHETHER OR NOT THEY ACTUAL LAY PLY IS SAY GOOD QUESTION.

>> Stephen: IT IS.

THANK YOU.

[LAUGHTER]

>> ONE OF CRITICISMS IS THIS NOTION THAT WE ALLOW THEM TO MAKE THE PROFIT AND WE THE

TAXPAYERS TAKE THE LOSS.

>> Stephen: YOU SAY BANKS SHOULD HAVE TO PAY FOR INSURANCE AHEAD OF TIME.

>> IT'S ONE OF IDEAS OUT THERE.

>> Stephen: WHAT ABOUT AIG.

THEY WERE THAT.

>> THAT DIDN'T GO SO WELL.

>> WE HAD TO BAIL THEM OUT TO THE TUNE OF 160 BILLION TO 180 BILLION.

>> THE ACTUAL ENSURERS ARE GOING ALONG WITH THE BANK AND S&P AND EVERYTHING IS GOING GREAT, DON'T

WORRY HERE.

THAT'S YOUR SET ASIDE THIS MONEY IN ADVANCE.

YOU SAY YOU KNOW WHAT, EVEN IF EVERYONE IS TILLING US EVERYTHING IS GOING GREAT.

THERE'S NO WAY THE MARKET CAN CRASH WE HAVE THIS SAFETY NET.

>> Stephen: DO YOU KNOW WHY IT'S A GREAT COUNTRY?

BECAUSE ANYWHERE ELSE ON EARTH WE WOULD LINE THEM UP AND SHOOT THEM.

[CHEERS AND APPLAUSE]

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