“I did not have sexual relations with that woman, Miss Lewinsky.”, President Bill Clinton, Jan. 26, 1998
“Unbelievably, even before he made this public statement he had used a technicality to avoid perjuring himself under oath. After these statements and many more public denials, Clinton was finally forced to leave the technicality behind, and under oath on August 17, 1998 he admitted he had an “improper physical relationship” with Lewinsky. In other words, when President Clinton was not under oath and not at risk of committing perjury, he lied to the American public. It was only when he was under oath and directly challenged, that he told the truth. The article below is unbelievable to me and I am surprised it has not received more attention. Mr. McGraw has provided an affidavit, a signed and sworn legal document (for which he can be prosecuted for perjury if he is not telling the truth), saying that U.S. Treasury Secretary Geithner threatened Standard & Poors over its 2011 decision to downgrade the U.S. government’s AAA credit rating. (This alleged threat was made to seek a reversal of S&P’s decision before its public release.) In response to this affidavit becoming public, Mr. Geithner, through a spokesperson, has denied making such a threat. Keep in mind, Mr. Geithner’s denial is NOT a sworn legal document and if he is lying, he cannot be prosecuted for perjury. Keep in mind, it appears from the article below that the substance of this discussion can be corroborated by Mr. Checki; a New York Fed official and that the New York Fed has declined to comment. Keep in mind that Mr. Geithner’s angry public statements at the time, regarding S&P’s downgrade, also seem to provide support for Mr. McGraw’s account. And finally, keep in mind that a potential S&P downgrade and loss of the U.S.’s AAA credit rating would be occurring for the first time in history; a negative and potentially risky event that any administration and U.S. Treasury Secretary would naturally be concerned about (both for the Country and their own reputations) and try to argue against and prevent. Given all of this, who do you believe is telling the truth? I can tell you that I am going to believe Mr. McGraw until both Mr. Geithner and Mr. Checki provide sworn affidavits and/or testimony that refute Mr. McGraw’s account (and I don’t think that’s going to happen). Also, think of the hypocrisy of Mr. McGraw’s account if true. The U.S. government (and others) has sued bankers saying among other allegations, that they sought to improperly pressure rating agencies to grant higher credit ratings on mortgage-backed and other securities. That pressure, the potential loss of business from one private company/issuer of securities, isn’t even in the same ballpark to the pressure Mr. McGraw and Standard & Poors must have felt when the sitting United States Treasury Secretary, threatens to bring the full weight of the U.S. government down upon them.”, Mike Perry, former Chairman and CEO, IndyMac Bank
S&P Chief Says Geithner Warned About U.S. Downgrade
Treasury Secretary Allegedly Said Firm Would be Held Accountable
BRADLEY HOPE and
DAMIAN PALETTAUpdated Jan. 21, 2014 4:51 p.m. ET
An angry Timothy Geithner warned the chairman of Standard & Poor’s Ratings Services’ parent company that the firm would be held accountable for its 2011 downgrade of U.S. debt, a legal filing alleges.
In a phone call with Harold McGraw III three days after the downgrade, Mr. Geithner argued that S&P had made an error in its calculations and said the firm’s conduct would be “looked at very carefully,” according to an affidavit from Mr. McGraw.
Mr. Geithner, who was Treasury secretary at the time, never made an explicit threat but said the government wouldn’t let S&P’s action pass without a response, Mr. McGraw said.
Timothy F. Geithner Bloomberg News
The account of the phone call was filed as part of a $5 billion fraud lawsuit brought last year by the Justice Department against S&P. The government alleges that S&P ignored its own standards in assigning credit ratings to mortgage bonds that imploded during the financial crisis, costing investors billions of dollars. The ratings firm, which is a unit of McGraw Hill Financial Inc., has long maintained the lawsuit was retaliation for its downgrade of U.S. debt.
“The allegation that former Secretary Geithner threatened or took any action to prompt retaliatory government action against S&P is false,” a spokeswoman for Mr. Geithner said.
The affidavit also adds a personal element to the dispute for both Mr. McGraw, who has previously tried to stay above the fray, and Mr. Geithner, who is writing a memoir about his tenure as Treasury secretary and is scheduled to start a new job with private-equity firm Warburg Pincus LLC on March 1. The document was filed on Monday in U.S. District Court in Santa Ana, Calif.
A spokeswoman for the Justice Department said there was “absolutely no connection” between the downgrade and the Justice lawsuit.
S&P’s announcement on Aug. 5, 2011, that it was stripping the U.S. of its triple-A debt rating came just days after the government averted a debt-ceiling crisis. The first-ever downgrade of the U.S. roiled world markets and highlighted the impact of political infighting on the economy.
The Friday evening decision came after a heated back-and-forth debate between senior Treasury officials and S&P.
Treasury officials discovered what they felt was a $2 trillion error in the baseline assumptions that S&P had used to model the growth of U.S. debt. Despite the Treasury pressure, S&P didn’t waver. The firm said at the time that the political “debacle” over whether to raise the debt ceiling was one of the factors that went into its decision.
“I think S&P has shown really terrible judgment, and they’ve handled themselves very poorly,” Mr. Geithner told CNBC two days after S&P’s decision.
S&P officials at the time painted the Obama administration’s backlash as a predictable reaction by any company or government that lost its top rating. S&P has denied its downgrade was based on any error and has described the government’s civil lawsuit as “meritless.”
Mr. McGraw, whose great-grandfather founded McGraw Hill, in the affidavit said he received a message on the Sunday after the downgrade from Terrence Checki, who was then the executive vice president of the Federal Reserve Bank of New York, where Mr. Geithner was president before becoming Treasury secretary. Mr. McGraw returned the call the next day.
“He told me that he was calling to pass a message to me from Timothy Geithner,” Mr. McGraw said of the Aug. 8, 2011, phone call, in the affidavit. “He said that Secretary Geithner was very angry at S&P. He said that Mr. Geithner viewed S&P’s processes as flawed.”
A spokesman for the New York Fed declined to comment.
Later that morning, he missed a call from Mr. Geithner that was later returned, Mr. McGraw said in the affidavit. Treasury Department records show the men spoke between 10:15 a.m. and 10:25 a.m.
During that call, Mr. Geithner said the executive and his ratings firm had “done an enormous disservice to yourselves and your country,” according to Mr. McGraw’s affidavit.
Mr. Geithner claimed S&P had made a major error in its calculations and that “you are accountable for that,” Mr. McGraw said of the conversation. Mr. Geithner then told him that the downgrade had done damage to the U.S. economy and that S&P’s conduct would be “looked at very carefully,” according to the affidavit.
It isn’t clear what impact Mr. McGraw’s affidavit could have on the case, in part because it appears based solely on his own recollection of the conversation, said Jeffrey Manns, an associate professor of law at George Washington University.
“The conversation can easily be contested because they don’t appear to have any recording or other proof,” Mr. Manns said. “What S&P is trying to do here is put some doubt in the jury members’ minds about why S&P was singled out in a case.”
However, Mr. Manns added that the affidavit may be useful in persuading the court to allow S&P access to more internal government records.
The retaliation claim is just one of several defenses S&P has offered. In previous filings, S&P lawyers have argued that while the firm’s ratings are independent and objective, in two earlier court decisions, judges have ruled that such statements by a firm were puffery and therefore can’t form the basis for a fraud claim.
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