S&P Admits in Court That Its Ratings Are Ridiculous and No One Should Ever Take Them Seriously

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Today, you should give thanks that you aren’t the attorney who has to defend Standard & Poor’s from charges that it misled investors about the objectivity of its bond ratings. Here’s their defense:

It’s true that courts have long allowed sellers to engage in what’s called “puffery.” If McDonald’s says they make the world’s best hamburgers, that’s OK. It may be a ridiculous claim, but what do you expect them to say? “Our burgers are pretty good if nothing else is available”? Basically, you’re allowed to make vague claims about your greatness without inviting lawsuits from folks who don’t like your burgers.

So when S&P says they use “market leading software,” they’re probably on firm ground. That’s standard puffery. Unfortunately, “transparent,” “independent,” and “objective” are a little trickier. Those words have actual meaning, and there’s only so far you’re allowed to stretch them. When your bond ratings are secretly based on the fact that bond issuers are paying you heaps of money for inflated scores, your claims of mere puffery are a lot less likely to succeed.

But hey! There’s no harm in trying. Well, there’s no harm aside from the endless mockery this defense is producing. After all, S&P is basically saying, sure, our ratings are completely meaningless because we just produce whatever rating the bond issuer pays us for, but everyone already knows that. Only a fool would ever have believed anything else.

Should be a fun trial.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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