Standard & Poor's executives lined up on a call with analysts Tuesday to defend the rating agency against a lawsuit by the U.S. government that could cost parent company The McGraw-Hill Cos. several years' worth of profits.
The call was scheduled as regular update on McGraw-Hill's earnings, but came just a week after the government filed its case — its most aggressive action to date against those deemed responsible for the financial crisis.
So far, there has been no public action by the Justice Department against Fitch and Moody's, S&P's two main rivals. That has raised doubts about the strength of the government's case. Despite a lack of evidence, some have wondered whether the charges were filed in retaliation for S&P's first-ever ratings downgrade of U.S. debt in August 2011.
Responding to an analyst's question, McGraw-Hill General Counsel Ken Vittor said the company isn't wasting time trying to figure out why it alone attracted the scrutiny of the Justice Department.
Here is that exchange, edited for length and clarity:
ANSWER: We can't speculate on the Department of Justice's motivations in deciding to sue Standard & Poor's and no other entity in connection with this lawsuit. The S&P ratings ... are identical to the ratings issued by other rating agencies. So we don't have an explanation and you'll have to ask the Department of Justice as to the motivation.
For us, the question is less the why than the how. How will the Department of Justice prove a fraud claim against S&P's analyst for arriving at ratings through a committee process that are identical to the ratings issued independently by other rating agencies?
So that to us is the burden that we don't believe the Department of Justice can sustain. ... How will they prove the case of fraud against S&P ratings when the ratings that were arrived at through a committee process were identical to ratings issued by other rating agencies who are not parties to this lawsuit?