Dear Madame L,
Now that Moody's has reaffirmed its AAA rating of the U.S. economy, why won't the folks at Standard & Poor's back down from their ridiculous AA+ downgraded rating?
Also, didn't you write awhile ago that the federal government is investigating S&P for its part in causing our current economic troubles?
What's up with that?
Yes, it appears that the Securities and Exchange Commission as well as the U.S. Department of Justice are indeed investigating Standard & Poor's, but also Moody's and the entire credit rating agency industry.
Sen. Al Franken (D-MN) has released a statement welcoming the news of the investigation but warning that "...they'll conclude what a lot of us have long known: S&P made record profits by knowingly handing out sterling credit ratings to complete junk...Until we rein in the corruption of the credit rating industry, we are just asking for another financial meltdown.”
Meanwhile, the city of Los Angeles has decided to decline S&P's ratings of its investment portfolio. L.A. Interim Treasurer told the L.A. Times, "We have really lost faith in S&P’s judgment." Other jurisdictions, including San Mateo County in Northern California and Manatee County in Floriday, have also dropped their contracts with S&P, which has downgraded them because of their large investments in U.S. Treasury notes.
Madame L thinks S&P is attempting to BLACKMAIL the U.S. government along with any entity that supports it by investing in its economy.
Why would S&P do that? Madame L suspects that the company which brought us to the brink of ruin by giving AAA ratings to junk bonds and other useless and toxic offerings is like the old-time school bully who takes your lunch money away and then hits you over the head for not giving him a candy bar, too.
The next obvious question is: Why does anyone put any faith in S&P or any of these agencies any more? They got their profits, while taking actions that have reduced the economic power of 95% of the American people.
If you haven't already, Dear Reader, please add your signature to this petition requesting that the SEC revoke Standard & Poor's credit rating authority.
Here's the background, from the firedoglake.com page:
"First, Standard & Poors threatened to downgrade the US credit rating if cuts were not made to Social Securty and Medicare to reduce the deficit.
"Then, two days after a bipartisan Senate committee found S&P's misleading mortgage ratings to be a 'key cause' of the 2008 financial crisis, the agency issued another downgrade threat.
"A few months later, after the SEC announced they would investigate agencies like S&P for fraud, S&P issued yet ANOTHER downgrade threat, this time with the arbitrary ransom of $4 trillion in deficit reduction which would likely include deep cuts to Social Security and Medicare benefits.
"Is S&P blackmailing the White House into absolving them of any responsibility for the 2008 crash by threatening downgrades every time there's an attempt to hold their feet to the fire? If that's the case, big benefit cuts are on their way."