The Obama Administration’s lawsuit against Standard & Poor’s is an attempt to make the rating agency a “scapegoat” for the financial crisis and Great Recession, says Washington Post columnist Robert Samuelson.

The Department of Justice’s lawsuit against S&P makes for “riveting headlines and lousy history,” Samuelson writes.

The lawsuit, he says, is akin to a conspiracy theory, an attempt to blame the financial crisis and Great Recession on greed and dishonesty.

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“The charge that S&P rigged bond ratings for its own gain — providing artificially high ratings on the mortgage-backed securities that inflated the credit bubble — fits this self-serving morality tale.”

The administration is seeking over $5 billion from the rating agency, accusing it with slapping top ratings on dicey mortgage-backed securities and collateralized debt obligations in return for business from Wall Street investment banks.

S&P wasn’t the only one to miss-rate the securities, Samuelson points out. Other rating agencies, regulators, the Federal Reserve, banks and investment banks that created the created the securities in the first place failed to predict the subprime mortgage collapse.

In reality, the financial collapse was due to an extended period of prosperity, weakened credit standards and “inspired wishful thinking about the permanence of economic growth,” according to Samuelson.

A long run of prosperity led people to believe that they could keep borrowing more and that home values would keep rising. With continually rising home values, lenders thought they had no reason to worry so their lending practices became reckless and sometimes illegal.

But that was more a consequence than a cause of the housing boom, Samuelson argues.

“This is a subversive theory, because it implicates millions of Americans and deprives us all of a self-righteous sense of victimization,” Samuelson writes.

“There must be villains, and they must be punished.”

Other commenters disagree.

Rating agencies, paid by investment banks to rate their mortgage packages, had fraudulent and shoddy practices in the years before the financial crisis, asserts the San Francisco Chronicle. S&P will have difficulty defending itself and may not even attempt a vigorous defense.

S&P’s reasoning that “the other guy did it too” may be true, but it is a meager defense, says the Chronicle.

The only problem with the government’s action is that it’s not going after the financial giants that caused the financial crisis, the paper says. S&P wasn’t the only culprit, and certainly not the largest one.

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