For the last 4 years, I’ve blamed the entire housing crisis on major banks and lending companies. I still think that their practices helped lead the way into the fiscal problems the industry had, as well as many other problems this country and the rest of the world has gone to.

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Then earlier today, another organization came into play. It seems that the Justice Department is contemplating filing a federal lawsuit against Standard and Poor, the rating company that determines the viability of businesses and individuals as to whether they’re a good investment risk or not.

The feds believe S&P was complicit in giving poor ratings to many companies involved in home building as well as home buyers, in essence playing both sides against each other as a false impartial participant, thus, using the same data in some fashion helped create the housing financial mess that ended up bankrupting many companies and having many homeowners abandon their homes to foreclosure.

Apparently there had been negotiating between the two parties that shut down when S&P was informed that they might end up having to pay a settlement of at least a billion dollars, and since that’s more the the profit the company earned last year, they’ve balked. Bad idea; a lawsuit and loss will cost them way more, to the possibility of treble damages if it’s determined that the company’s actions were fraudulent.

From their perspective S&P denies any wrongdoing; well, that’s to be expected. Their official statement was thus:

“A D.O.J. lawsuit would be entirely without factual or legal merit,” the agency said in its statement. “With 20/20 hindsight, these strong actions proved insufficient – but they demonstrate that the D.O.J. would be wrong in contending that S.&P. ratings were motivated by commercial considerations and not issued in good faith.”

Interesting response. Without the same people in charge now being there when things began, I’m not sure how they can represent those previous actions with such confidence. Still, with their reputation on the line and a falling stock price, one figures they just might have to take a chance with the lawsuit to see where it all falls out.

I’m not saying they’re guilty by the way. I will say though that it’s not beyond the realm of believability that their actions harmed a lot of companies and individuals, purposely or not. I feel no sympathy.

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