S&P Gives Higher Rating to Sub-Prime Mortgages than to U.S. Bonds

[The Straight Story]

S&P Gives Higher Rating to Sub-Prime Mortgages than to U.S. Bonds

Standard & Poor’s, the Wall Street rating institution whose integrity already was questioned a few years ago, has decided that securities backed by subprime home loans deserve a higher rating than bonds issued by the federal government.

That’s right, subprime loans—the same securities that led to the 2008 financial meltdown.

S&P’s decision involved giving AAA grades to 59% of Springleaf Mortgage Loan Trust 2011-1, a set of bonds linked to about half a billion dollars loaned to homeowners with virtually no equity and below-average credit scores, according to Bloomberg.

The move followed S&P’s stripping the U.S. of its top rating in early August, while Democrats and Republicans bickered over how to raise the debt ceiling.

http://www.allgov.com/Controversies/ViewNews/S_and_P_Gives_Higher_Rating_to_Sub_Prime_Mortgages_than_to_US_Bonds_110906

[fasttense]

1. S&P is a cartel of criminals. n/t

[Bragi]

2. Perhaps this is one difference

The mortgage holders may be strapped, but they haven't announced that, for ideological reasons, they may default on their payments.

The U.S Congress, however, made it clear during the credit ceiling crisis that they are prepared to default on U.S national debt for ideological reasons.

That's why the US credit rating was (in my view) justifiably downgraded.

It isn't that the U.S cannot pay its debt, it's that Congress has made it clear for the first time in history that it may choose to default, for purely partisan reasons.

With Congress now dominated by reckless ideologues, and a weak President unwilling to take them on, the U.S is in dangerous times.