S&P seems to have found a loophole: If the government is singling you out to retaliate against you for exercising your First Amendment rights to criticize the government, then perhaps you can get the case dismissed.5 Or, at least, you can demand enough embarrassing internal government communications to make the government think twice about bringing charges.
If this works, it's quite a discovery! You occasionally hear speculation that JPMorgan's horrible year of fines last year was driven in part by retaliation for Jamie Dimon's outspokenness on regulation, and on everything, but imagine JPMorgan fighting some of those fines by making that claim, and seeking documents from regulators to back it up.
Even better, it shifts the incentives a bit. Financial firms generally want to be on good terms with their regulators, and to avoid criticizing them publicly. But S&P's defense suggests that the opposite strategy might have some appeal: Just criticize your regulators constantly and harshly and in as high- profile a way as possible. Then, if they ever do go after you, argue that it's just retaliation for the criticism. Criticizing your regulators could serve as (pretty weak, but still) insurance against lawsuits from those regulators. Plus, it's more fun than pretending to approve of everything they do.
1 There are claims that (1) Moody's was rating those securities pretty generously to begin with, (2) S&P was worried about losing business to Moody's, so (3) S&P relaxed its standards to be closer to Moody's. If you believe this narrative -- and there are gaps and exceptions and so forth in it -- then Moody's looks worse than S&P, which at least tried to be strict for a while but eventually gave up. But S&P looks easier to sue, because there are lots of emails to the effect of "hey let's relax our standards to be more competitive with Moody's." I have a similar theory about JPMorgan in China.
As general background I think that the lawsuit against S&P is pretty silly on its terms, though the impulse to get mad at S&P for misrating everything that caused the financial crisis is pretty understandable. Anyway here's what I said about the lawsuit when it came out.
2 Highlights include the Atlantic saying "Even if this investigation was started before any of this downgraded business began, it is now hopelessly compromised"; McClatchy Newspapers quoting a "person familiar with the case" saying "After the U.S. downgrade, Moody’s is no longer part of this"; a Wall Street Journal editorial, and the Guardian pointing out that:
Egan Jones and S&P share two characteristics that should raise an eyebrow: both downgraded the US and subsequently faced disciplinary action from the US government. Perhaps this helps explain why Moody's chose to downgrade the UK while leaving the US at Aaa.
3 As they have in, for instance, CDO fraud cases, where pretty much every bank paid a big settlement for doing stuff that they all seem to have thought was market standard. Libor is shaping up to be broadly similar.
4 That's one way to view the SAC-related insider trading cases. Lots of people were involved and not charged, for one thing. For another thing, if talking to investor relations people at companies is illegal, a lot of investors should be in jail.
5 That's their theory. I ... don't know? The cases they cite don't exactly say that, as far as I can tell. But, whatever, seems reasonable.