p. fitch and moody's were all warned about and so they all deliberately adopted of the financial version of don't ask don't tell and there's a infamous s. and p. memo from two thousand or two thousand and one in which the poor professional rater asked for the loan files so we can actually reduce the credit quality of the sample of loans so what happens he gets back in flame graham from his boss in all capitals trouble explanation saying that it is totally outrageous to ask to see the loan files that people that merrill lynch's of the world believe in brothers putting these c.e.o.'s together don't even have a loan files and never looked at the loan. can you compare the looting going on in the u.k. with the looting by the bankers yes when your most elite or most powerful members of society. opt strategy of what a famous french economist very conservative called plundering then as he said they will develop a morality that doesn't simply permit plundering but valorize as it. and when that happens the moral structures of the society will inevitably deteriorate in the upper classes that we sti

by 2006 roughly a percent in the united states were liars loans and s&p, fitch, moody's, gave aaa to every single one of the top tranche of those issuenses. so if you don't get those lies by s&p you don't get the crisis. and, you're right. holder, attorney general holder, has continued, attorney general casey under bush's policy, that you can defraud the united states of america with impunity if you are politically powerful and make large political contributions. >> bill fleckenstein, that alone, what mr. black described, is a good reason to shake confidence when their evidence you can defraud the u.s. government with impunity using the banking system and banking fraud, and will not be prosecuted. you have told me many times at the root of this entire issue, bill, bill fleckenstein is accounting fraud. what do you mean when you say that and how do the ratings agency decision for all this lead us to this conversation today? >> well when i say accounting fraud, what i mean is, you know, in the financial system the way the books are kept and the market to market accounting and level one

whatever it was was curious, it's not going to-- they were shooting back at s & p, the government is-- >> for now they've left fitch and moody's off. >> i don't believe that. i believe they're involved. >> neil: s & p is the one that was reported. >> noi what was reported. i believe they're in it together and i will say this though, if were you going to tell me does anybody deserve to be investigated out of the 2008 financial crisis, it's s & p, moody's and fitch. >> neil: and that would put congress. >> listen, i've been very, i've always said it was a government inspired crisis, but these guys put triple-a ratings on some of the worst. >> neil: no doubt, no doubt. >> they might have caused the financial crisis. >> neil: and s & p, and believe me i'm not saying it saint. i find the curious gangup, and senate banking panel looking into it and, i don't see that with fitch and moody's, maybe it will come, but i don't see it. >> it is pay back and it's headlines, but frankly you need to have your head examined if you buy anything based on what standard & poor's says. going back to enron and worldcom. the mortgage secu

p. and fitch commit fraud they commit fraud f r a d that no one's going to call up and say hey max don't call us fraudulent peddlers of fraud or securities because they have to prove that they were selling fraudulent securities or not if you haven't got that call yet come on the show it's total fraud the fact that they even have a license to operate in america shows that america has become one big cluster well the important thing banks is this wasn't two thousand and seven it's openly reported and bloomberg news barack obama eric schneiderman all the attorney generals who are who are demanding that eric schneiderman make a deal with these banks to give them immunity from all of this fraud they're saying that they want to move on a twenty billion dollars which is not even half of what they collected in bonuses christmas bonuses last year and one out all across america you're seeing austerity measures imposed and a lot of the population demanding it that it's these pension funds that they're underfunded now it's the reason why they're underfunded is. because they've made too many promises

some investors are saying, i'm not waiting for s&p and fitch in order to make a decision about whether to buy u.s. bonds. u.s. bonds have been trading very actively in the last few days and interest rates have gone down. that may have more to do with the fact that european bonds have become more expensive so we're watching to see what's going on. >> john king, you've been talking to your sources around the white house and in the administration about their reaction and they are certainly not happy about this? >> they're very unhappy. they say what s&p said in the analysis, i'm told the treasury department got it at 1:30 this amp. i'm told treasury analysts quickly caught a mistake and say the s&p projection of u.s. deaf ask its over the next ten years was $2 trillion off. so, again, i'm told and consider the source, the administration official, and they're not happy tonight. but he says that s&p said -- you're right, actually. we'll redo our analysis but they came back and said we still believe structurally it isn't big enough and we believe this is not a credible enough plan tla theref

p. not necessarily moody's or fitch? >> i think people thought if there was no change it was matter time. i think it was going to happen, just a question of when. >> neil: all right. so this notion that money finds another home, that all these people who have been supporting our debt, chinese, the japanese, the canadians, the germans, that they have nowhere else to go, is that true? >> they have gold to go to. you will see -- we will see how gold trades. u.s. is still the best house in maybe not such a great neighborhood. western economies people still want to own treasuries. >> neil: that's better than my view we stink they stink more. that's far more harvardish. no wonder you are a harvard professor. former vice chair at goldman sachs; he has been pretty uncanny on this. different reaction, one for the treasury markets where they are fairly san begin and okay one for the stock market where they are barney five. come back to d.c. now. do it right this time. republican jack kingston demanding his leagues do just that a c

if fitch and moody's had ginned s&p to say, hey this -- had joined s&p to say, hey this turkey stinks? >> probably not. i think the markets had already anticipated this. >> neil: they believe s&p not necessarily moody's or fitch? i think people thought if there was no change it was a matter of time. i think this was going to happen, just a question of when. >> neil: this notion that money finds another home. all these people who have been supporting our debt, they have nowhere else to go, is that true? >> they have gold to go to. we will see how gold trades. as they say, u.s. is still the best house in maybe not such a great neighborhood. it is all relative. in economies i think people still want to own treasuries. >> neil: better than my view, we stink, they stink, far more harvardish. robert kaplan, thanks very much. he's been pretty uncanny on this a different reaction one for the treasury markets where they are fairly sanguine and okay one for the stock market where they are barney fife. do it right this time, republican jack kingston demanding his colleagues do that. congressman

p. moody's and fitch let's assess test one the mortgage crisis of two thousand and eight these are the same agencies that rated the toxic sub prime debt aaa so i mean how do we take them with any level of credibility after that. well let's see if they get any from tess to the too big to fail banks and insurers during the financial crisis they missed many of the big bankruptcies they gave high investment grade. ratings to lehman to bear stearns right to the very end gee they gave a aaa rating too to almost the day collapse good grades for firms that collapsed or were bailed out because of bad debt in fact the financial crisis inquiry commission said the three credit ratings agencies were key enablers of the financial meltdown and this brings us to test three ethics ratings agencies are paid by the investment firms they grade and moody's and s. and p. are publicly traded which means they may be more driven to increase profits for shareholders raising this debate right now you have the companies that are are being judged paying the bill and they can live around being a big berkshire the mr buf

p downgrades u.s. credit rating but the reason fitch keep it actually? >> whether the s&p downgrades will be largely symbolic. people still purchase u.s. debt. aaa from to the other agencies and to aa from the s&p. that could happen but it would be largely symbolic. think of the moment with the debt deal done, the markets of turned their attention to the weak economy and the crisis in europe. >> we appreciate that, david kelly on the economy. 7:08 a.m., we're back with more of a couple of minutes. let's go from the mt. tam cam and all of those clouds. it will be as gorgeous as yesterday but it will take a while. as yesterday but it will take a while. en. now with new bigger white meat breast pieces, marinated for juiciness. freshly seasoned and slow grilled by real cooks. just wait until you try this kentucky grilled chicken. it's that good. today tastes so good. who should get it? i really love jennifer. yeah, she's great. yeah. yeah. kyle's got that thick head of hair. and that should be rewarded. okay, moment of truth. on "three," say which kid you lov

s&p, moody's and fitch, the big rating agencies.ch risk is involved in a country's debt. they assign a grade to show a country's ability to pay back loans. the safest bets are stamped aaa and that was the rating the united states held since 1917 until friday. those ratings are based on the opinions and analysis of the agencies and right now s&p is pessimistic on the government's handling of america's debt. it is simply too big, america's debt too big and the acrimony in washington is too big to solve it. s&p says overall they look at these five factors when assigning a debt rating, a score, to a country. they're each rated on the scale of one to six to create a political profile, also flexibility and performance and the agency said political risks and a rising debt burden, the two driving forces in its downgrade of america's credit rating. the five reasons, political, economic, external, fiscal, and monetary policies. now that united states has been downgraded how does it stack up to other countries. 16 countries left in s&p's aaa c

everybody is saying that if you talk to the ratings agencies, specifically, moody's, s&p and fitch, s is a little more aggressive than the other two, and they were in essence telling us at fox business, two weeks ago they needed to see $4 trillion in cuts and obviously that is not what we are getting. we are getting $2.4 trillion over the ten years and the question is how likely is it? now people are telling me and i figured, let me go to people who used to work at the ratings agencies and they are not worried they'll get in trouble for talking and, a former economist at s&p, told me that now there is a possibility that we won't see a downgrade, because, they will look at the $2.4 trillion in cuts and say, that is considered a down payment on an eventual $4 trillion or close to it, none of these ratings agencies wants to be the one to downgrade the aaa platinum status of the u.s. credit. alisyn: that is the optimistic outlook. and if we were to be downgraded, when might that happen? >> well, the big question is, would it happen today? once the bill is voted through? if it is indeed vo