The Wall Street Journal attempted to absolve ratings agency Standard & Poor's from allegations of fraud, ignoring the mounting evidence against the firm that indicates it contributed to the financial crisis.
On February 5, the Justice Department filed civil charges against S&P, alleging that the firm knowingly inflated ratings on investments leading up to the financial collapse. Following S&P's request on April 23 to dismiss the case, The Wall Street Journal editorial board quickly ran to the firm's defense, claiming "the judge ought to grant S&P's motion for many reasons, not least because otherwise no one will be able to sort Washington's list of victims and villains."
The editorial argues that federal action against S&P is unwarranted, because the Justice Department alleges that banks, who have previously been targets of lawsuits themselves, were defrauded by S&P's overly optimistic ratings. The Wall Street Journal's logic suggests that S&P couldn't possibly be accused of wrongdoing because the banks that used its ratings are also accused of wrongdoing:
The truth is that S&P's ratings on mortgage bonds, along with those issued by Moody's and Fitch, did inflict terrible damage. But this was not because employees at these firms are more stupid or unethical than those at other businesses. The damage occurred because the same government that's now suing S&P required financial institutions to use the ratings issued by S&P and the other raters.
Of course, in arriving at this conclusion, the editorial conveniently omits the facts behind the Justice Department's lawsuit. According to WSJ's own reporting in the wake of the financial crisis, internal emails at S&P suggested that analysts knew how risky mortgage-backed financial devices were, and that the firm adjusted ratings to satisfy their clients instead of providing objective analysis.
Furthermore, the editorial fails to mention that S&P's recent request to have the suit dismissed relies on the firm rejecting its long-standing position that its ratings are objective -- a fact that the Justice Department's complaint makes clear. Instead, S&P now alleges that its ratings "were never meant to be taken at face value by investors," as the WSJ noted in its own reporting.
WSJ's fact-free defense of S&P falls in line with previous attempts by conservative media to shield the firm from legal action. When the Justice Department's complaint was initially filed, right-wing media figures dismissed the suit as "government retribution" over S&P's previous downgrade of U.S. credit.