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S&P made its decision, saying the U.S. government is becoming “less stable, less effective and less predictable,”even after acknowledging to the Treasury Department a $2 trillion error in its calculations that by its own methodology could have prevented any change from a AAA rating. Since S&P still insisted on downgrading the U.S. eight months after raising China’s rating, the company’s credibility has come under increasing scrutiny.
“It was really kind of bizarre that they’ve become political analysts,” said Thomas Mann, a congressional scholar at the Washington-based Brookings Institution. “I certainly never look to any of the three rating agencies as a source of expertise, knowledge or wisdom on the political system.”
S&P said in July that $4 trillion in budget cuts could be enough for the U.S. to maintain its top grade. Lawmakers agreed on Aug. 2 to raise the nation’s $14.3 trillion debt ceiling and put in place a plan for $2.4 trillion in spending reductions over the next 10 years. When S&P conferred with the Treasury Department before announcing the downgrade, government officials said the firm had overestimated the future national debt by $2 trillion.
S&P changed the numbers and said the error didn’t affect its conclusions that the U.S.’s debt-to-gross domestic product ratio will probably continue to rise in the next decade. S&P“chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one,” John Bellows, acting assistant secretary at the Treasury, wrote on the department’s website. The Securities and Exchange Commission is scrutinizing the method S&P used to cut the U.S.’s credit rating and whether the firm properly protected the confidential decision, according to a person with direct knowledge of the matter.
S&P made its decision, saying the U.S. government is becoming “less stable, less effective and less predictable,”even after acknowledging to the Treasury Department a $2 trillion error in its calculations that by its own methodology could have prevented any change from a AAA rating. Since S&P still insisted on downgrading the U.S. eight months after raising China’s rating, the company’s credibility has come under increasing scrutiny.
“It was really kind of bizarre that they’ve become political analysts,” said Thomas Mann, a congressional scholar at the Washington-based Brookings Institution. “I certainly never look to any of the three rating agencies as a source of expertise, knowledge or wisdom on the political system.”
S&P said in July that $4 trillion in budget cuts could be enough for the U.S. to maintain its top grade. Lawmakers agreed on Aug. 2 to raise the nation’s $14.3 trillion debt ceiling and put in place a plan for $2.4 trillion in spending reductions over the next 10 years. When S&P conferred with the Treasury Department before announcing the downgrade, government officials said the firm had overestimated the future national debt by $2 trillion.
S&P changed the numbers and said the error didn’t affect its conclusions that the U.S.’s debt-to-gross domestic product ratio will probably continue to rise in the next decade. S&P“chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one,” John Bellows, acting assistant secretary at the Treasury, wrote on the department’s website. The Securities and Exchange Commission is scrutinizing the method S&P used to cut the U.S.’s credit rating and whether the firm properly protected the confidential decision, according to a person with direct knowledge of the matter.
We knew at the time of the downgrade that they admitted to a $2 trillion mistake in their figures. I wonder why the MSM has relatively ignored this story all this time.
I saw mention of the fact that S & P had become politically involved in our government. NOw that tells me something but I am not sure what. I wonder if old Spooky Dude Soros was behind this activity. It is possible.
We knew at the time of the downgrade that they admitted to a $2 trillion mistake in their figures. I wonder why the MSM has relatively ignored this story all this time.
I saw mention of the fact that S & P had become politically involved in our government. NOw that tells me something but I am not sure what. I wonder if old Spooky Dude Soros was behind this activity. It is possible.
The President and CEO of S&P is a REPUBLICAN who donates a considerable amount to the REPUBLICAN Party.
Gosh darn ya think THAT has anything to do with it...about damn time they were investigated!!!!
It's not like we all don't know that we are running a DEFICIT each year.
With our debt so high $4 trillion or $2 trillion is NOT going to make a difference.
We are on a collision course with debt and our foot is on the gas pedal.
As the downgrade results in the borrowers (us) paying the lenders (them) much more over the years I was not surprised by the S&P action. It was in the best interest of their owners and managers to increase our cost of borrowing regardles of any real risk or not.
The President and CEO of S&P is a REPUBLICAN who donates a considerable amount to the REPUBLICAN Party.
Gosh darn ya think THAT has anything to do with it...about damn time they were investigated!!!!
They being the Republican Party? Maybe the right people are being investigated and the investigation will lead to the real culprit. If it is the Relublican Party then punish them. How to do it? That may become a real poser for the present administration, but then I know a number of czars who would be glad to help do something.
The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.
...
During the boom years, S.& P. and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.
Since the crisis, the agencies’ business practices and models have been criticized from many corners, including in Congressional hearings and reports that have raised questions about whether independent analysis was corrupted by the drive for profits.
I have no problem with this - if the investigation would have occurred two years ago. Now, it just seems vindictive.
This is typical of this administration. People and entities may sin - but justice only occurs when the timing is to their advantage.
It's long but the first paragraph sums it all up quite well. I don't think it will be long before all the other rating agencies grow a pair and start calling it like it is too or do so just to CYA. Look forward to more downgrades of the good ol USA in the near future IMO.
The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.
... During the boom years, S.& P. and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.
Since the crisis, the agencies’ business practices and models have been criticized from many corners, including in Congressional hearings and reports that have raised questions about whether independent analysis was corrupted by the drive for profits.
I have no problem with this - if the investigation would have occurred two years ago. Now, it just seems vindictive.
This is typical of this administration. People and entities may sin - but justice only occurs when the timing is to their advantage.
the city limits of Chicago have expanded to DC and taken the political vermin that infested it with them
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Payback Time for Standard & Poor - Justice Dept. on the Prowl
