Audit Notes: Google’s stonewalling, Moody’s spin clinic, USDA mortgages

An NYT story on how the company tried to stymie investigators of its Street View program

This New York Times story is a few days old, but worth flagging.

The paper reports on Google’s roguish reaction to inquiries about the privacy violations of its Street View program, which was discovered to be collecting data from homes’ wireless signals as it photographed them:

After French privacy regulators inspected a Street View car in early 2010, the company was forced to explain that the cars were collecting information about household’s Wi-Fi networks — in essence, how they connected to the Internet — to improve location-based services…

Still, German regulators, particularly Mr. Caspar, the data protection commissioner for Hamburg, were alarmed. Google, Mr. Caspar noted, had said nothing about collecting Wi-Fi data when negotiating permission for Street View.

Mr. Caspar wanted to inspect a Street View car. Google first said it didn’t know where they were, so it couldn’t produce them. Then, on May 3, it allowed a technical expert in Mr. Caspar’s office to see a vehicle. But the hard drive with data was missing…

Mr. Caspar asked to see the hard drive. Google said handing it over could expose it to liability for violating German telecommunications law, which prohibits network operators and other data managers from disclosing the private communications of their clients.

The company also stonewalled American investigators.

— Bloomberg News reports that recent downgrades of Nordic countries show the credit-ratings firms like Moody’s influence is waning. Bonds and stocks rose after Moody’s slashed the credit ratings at big banks in the region.

So how did Moody’s PR department respond to Bloomberg’s reporting on the declining impact of the company’s ratings?

“The ongoing debate surrounding Moody’s credit opinions is a testament to our relevance,” Jessica Sibado, a Moody’s spokeswoman said in a phone interview today.

Now that’s some spin.

— Also from last week, The Wall Street Journal’s Ruth Simon had a good story on how the USDA, increasingly in the mortgage-lending business, is using aggressive debt-collection practices like garnishing wages to collect on bad loans in rural America:

Unlike private firms, the USDA doesn’t need permission from a court to start collecting on unpaid debts. It can in some cases seize government benefits and tax refunds before a foreclosure is completed. After foreclosure, the USDA can go after unpaid balances, even in states that limit such actions by private lenders…

The USDA is wielding its special powers even as the Obama administration is forcing private banks to give strapped homeowners a break. Under a $25 billion settlement over questionable foreclosure practices announced in February, five large banks agreed to slash loan balances and forgive the debt of borrowers who lost homes to foreclosure…

The Federal Housing Administration and Veterans Administration, which also guarantee mortgage loans issued by private lenders, say they generally don’t pursue borrowers for debt left after foreclosure. “We’d gain nothing by placing an even greater debt burden on the borrower,” an FHA spokeswoman says.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,