Receiving Wide Coverage ...
A Whole Lot of 'Puffery': Standard & Poor's is formally urging a judge to dismiss the government's civil lawsuit alleging the agency ignored its own standards and rated mortgage investments much higher than they should have been in years leading up to the financial crisis. S&P argued on Monday that the DOJ "had failed to substantiate its allegation that the CDO ratings would have been lower based on the deteriorating housing market," reports the Financial Times. It is also arguing that "snippets" of conversation cited in the DOJ's claim don't constitute evidence and, instead, "add up to 'classic puffery,' the vague and overblown language that businesses often use to describe the virtues of their products and services," Dealbook reports. Lawyers appear to be going with this argument since it has worked in the past. "Legally, that might be a tenable defense," some lawyers tell the Journal, "but politically and reputation-wise," it's not a good look for an agency that essentially sells its seal of approval to clients. A hearing to decide whether the case will proceed is scheduled for May 20, but Bloomberg reports a complete dismissal is unlikely. "S&P can't support its request to dismiss the case by supplying evidence to contradict the allegations," a formal federal prosecutor said. "It can only argue that the Justice Department will never be able to prove its civil fraud claims." Another lawyer, however, told the news provider that, in the long run, the case isn't likely to go to trial, predicting "the company will eventually reach a settlement with the government."
Blocked: House Republican Jeb Hensarling is refusing to allow Consumer Financial Protection Bureau Director Richard Cordray to testify in front of the House Financial Services Committee until he is confirmed by the Senate. Cordray was scheduled to present the CFPB's semi-annual report to the House on Tuesday. Hensarling contends, however, that Cordray has yet to be legally appointed to the director's position, thanks to a federal appeals court decision invalidating several of President Obama's recess appointments. This decision did not directly involve Cordray's appointment. The Journal says Hensarling's move "escalates the long-running battle" over leadership at the CFPB and that "Cordray may have to leave the agency if the issue isn't resolved by year-end." Washington Post, American Banker
SEC Enforcer, Times 2: Mary Jo White made it official yesterday, appointing Andrew Ceresney as co-head of the Securities and Exchange Commission's enforcement unit. No concrete details have emerged about how Ceresney will split duties with George Canellos, but reaction to White's usual move — the role has never before been shared — was decidedly mixed. One-time rogue regulator Benjamin Lawsky told the Journal Ceresney and Canellos "won't be shrinking violets" in policing Wall Street, while Dealbook reiterates Ceresney's appointment "could renew concerns about a revolving door that shuttles SEC lawyers from the government to the private sector, and back again."
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