FORTUNE -- Countless victims lost big during the financial crisis: There were individual investors, homeowners, community banks, and municipalities. The list goes on.
And now five years later, Standard & Poor's, one of the three big credit rating agencies, considers itself a victim, too.
Recall, the Justice Department in February filed a $5 billion lawsuit against the firm for allegedly misleading banks and credit unions about the credibility of its ratings prior to the 2008 crisis. On Tuesday, S&P filed its rebuttal, arguing the government is suing the firm in "retaliation" for stripping the nation of its stellar "AAA" rating back in 2011.
As S&P defends itself, it's easy to lose sight of who the real victims are.
It's indeed curious why the Justice Department is only going after S&P when other firms were responsible for nearly destroying the U.S. financial system. In the years leading up to the financial crisis, other rating agencies gave top-notch ratings to what were essentially toxic assets that banks, in turn, sold to investors. When those assets went sour as the housing market collapsed, the crisis exposed deeper flaws with the way these firms do business -- namely, the companies and governments they rate also pay them.
The Justice Department has taken S&P to task, but why not Moody's (MCO) or Fitch Ratings? As S&P argues, the Justice Department's lawsuit aims to punish it for exercising its First Amendment free speech rights under the U.S. Constitution. The firm was the only major rating agency that downgraded the U.S. over concerns about Washington's ability to address the nation's swelling debt. Moody's and Fitch warned the U.S. of a downgrade but haven't actually gone through with it.
S&P may or may not be right, but that starts mattering a lot less when we revisit findings from the government's investigation, which started in 2009 -- about two years before S&P downgraded the U.S. The evidence is damning, and the victims spanned widely: There was the analyst who e-mailed colleagues a rock parody, making light of toxic investments that would later drive the economy into a disastrous subprime mortgage meltdown, according to the Justice Department's civil suit against S&P. And as early as 2007, the firm suspected the housing market would crash followed by millions of defaults and foreclosures. Rather than sound the alarms, the firm inflated ratings to win more fees from issuers, according to the Justice Department.
A spokesperson for S&P declined to comment Wednesday.
The firm could call itself a victim, but it's hard to see why the Justice Department would be out for revenge. Since S&P downgraded the U.S. in August 2011, it hasn't rocked markets as badly as some expected. This isn't surprising, as investors started believing the rating agencies less and less following the financial crisis. Since the downgrade, yields on Treasuries are lower, the U.S. dollar is stronger and the S&P 500 Index of stocks (SPX) has reached record highs. And when S&P in June raised its outlook on the U.S.'s credit rating to "stable" from "negative," markets pretty much snoozed at the news, too.
If anyone can call themselves victims here, it's not S&P.
Ready for another bailout of Ireland? Moody's is.
The rating agency slashed Ireland's ratings to junk Tuesday, just three months after its last downgrade of the debt-soaked former Celtic Tiger. Moody's warned that Ireland isn't likely to be able to raise funds in the bond market after its current bailout loan expires at the end of 2013.
Ireland, laid low by its decision to bail out its reckless, feckless banks, took 85 billion MOREColin Barr - Jul 12, 2011 4:02 PM ET
Europe's bailout trap ensnared Portugal Tuesday, as S&P downgraded its debt.
The rating agency cut its rating on Portugal to triple-B-minus from triple-B, citing last week's decision by European ministers to impose strict terms on nations that tap a new bailout fund taking effect in 2013.
The downgrade wasn't unexpected, S&P having recently warned it was headed in this direction. S&P also downgraded Greece to double-B-minus from double-B-plus, citing the same bailout rules.
But MOREColin Barr - Mar 29, 2011 11:20 AM ET
Moody's warned Thursday that the tax cuts enacted last month could push up U.S. borrowing costs and erode some of the dollar's global appeal.
The rating agency said the United States' embrace of fiscal stimulus rather than debt reduction creates "a small but increasing likelihood that markets will demand a higher risk premium on government debt, in sharp contrast to the safe-haven status that the U.S. Treasury bond has long enjoyed."
Moody's noted MOREColin Barr - Jan 13, 2011 10:02 AM ET
Contrary to what you might have thought over the past week or two, every country in Europe isn't in danger of an imminent downgrade.
So says Standard & Poor's, which affirmed France's triple-A rating Thursday. The rating agency cited French belt-tightening progress and a political environment that it says is "stable and oriented toward prudent economic policies."
The rating agency said it expects the economy to grow slowly but surely in 2010 MOREColin Barr - Dec 23, 2010 2:47 PM ET
A publicity-minded Chinese rating agency has added its two renminbi to the cacophonous debate over the Fed's latest tilt at money-printing.
The state-backed Dagong Global Credit Rating Co. on Tuesday downgraded its rating on the United States to A-plus from double-A, maintaining its negative outlook.
It warned that the Federal Reserve's plan to buy $600 billion of Treasury securities over eight months in its second go at so-called quantitative easing could trigger a MOREColin Barr - Nov 9, 2010 2:42 PM ET
I appeared this weekend on China Network Television to discuss the efforts of Chinese rating agency Dagong to crack the market currently dominated by Moody's (MCO), Standard & Poor's and Fitch. As badly as the U.S.-based agencies have botched things, it is going to take a while for anyone to break their grip on the market, as I discuss with two other hard-hitters. You give us 22 minutes, we give you the world, MOREColin Barr - Jul 19, 2010 4:02 PM ET
Shareholders liked BP's decisions Wednesday. But a bigger question is how the rating agencies will take the news.
Mollifying President Obama and restive shareholders isn't the only task for the oil giant's chairman, Carl-Henric Svanberg (right, with Obama).
Now he and his minions must court the rating agencies. Both Moody's and Standard & Poor's downgraded BP (BP) earlier this month, saying massive legal and cleanup costs from April's gulf coast oil spill would weigh MOREColin Barr - Jun 16, 2010 4:21 PM ET
Why fix a problem when you can study it instead?
That's what members of Congress seem to be asking when it comes to financial regulation.
Two years after the financial sector imploded and policymakers poured trillions of dollars into the financial system, reformers are pushing for sweeping new rules, saying a financial industry overhaul is long overdue. Wall Street is fighting to beat the new guidelines back, warning of higher costs and MOREColin Barr - Jun 15, 2010 3:12 PM ET
Berkshire Hathaway cut its stake in rating agency Moody's for the third straight quarter, according to a regulatory filing.
But other big investors have been buying the beleaguered rating agency, whose shares have fallen 19% this year.
Berkshire (BRKA), run by billionaire investor Warren Buffett, sold a million shares of the New York-based company in the first quarter ended March 31. Berkshire remains Moody's (MCO) biggest single investor with a 31 MOREColin Barr - May 18, 2010 10:27 AM ET
|Stocks falter as budget deal raises taper risk|
|Teen millionaire helping Yahoo become cool again|
|"The Hobbit" dispute sparks lawsuit|
|Spotify announces free mobile streaming|
|Obamacare: 365,000 have signed up for insurance on exchanges|