It’s a sword dangling over George Osborne’s head – the threat of agencies like Fitch, Moody’s and Standard & Poor’s to downgrade Britain’s international credit rating.
Any such move would be politically embarrassing, but would it have any practical significance?Other countries, such as Japan and America, have been downgraded, but without much impact on the rates at which their governments can borrow.
Furthermore, why should we care about agencies that were handing out triple-A ratings to investment products that have caused so much trouble in recent years. In fact, many people have asked why these agencies aren't being sued, or even prosecuted, for their role in the financial crisis.
As it happens, one of the big three credit rating agencies – Standard & Poor’s – is being sued: For several billion dollars by the US Department of Justice.
John Cassidy tells the story so far in the New Yorker:
Twenty million pages of emails – think about that the next time you complain about the paperwork in your in-tray! Though people are understandably angry about the lack of action taken against those individuals and institutions who were responsible for the financial crisis, it’s worth bearing in mind the sheer amount of work involved in preparing a case that will stand up in court.
Cassidy cautions that the case against S & P is far from being open-and-shut:
Whatever the failings, misdemeanors and outright crimes of any particular financial institution, we must never forget the context in which they took place. The “bubble” that Cassidy refers to wasn’t something generated all by itself on Wall Street or the City of London, it was the direct result of a massive expansion of credit for which the politicians of the era were as responsible as any financier.
One wonders when they will get their day in court.