Revenge Unleashed Against S&P For Downgrading U.S. Credit

Standard & Poor's downgraded the U.S. government's credit rating because of its serious concern for the U.S.'s rapidly growing deficits. S&P was saying "the king has no clothes," as they looked at his naked body.

But the two other major rating agencies, Moody's and Fitch didn't lower the U.S. government credit rating despite the U.S.'s rapidly mounting deficits, no plan to deal with them and the political chaos in Washington. Why? Because S&P is now in a firestorm from the U.S. government. The SEC, Justice Department and Congressional Committees are investigating whether S&P should be charged with fraud over its Triple A ratings of mortgage securities which played a crucial role in the financial collapse three years ago. This means S&P's top management will be repeatedly testifying, reams of material must be provided and huge legal fees await. Moody's and Fitch had also issued Triple A ratings, but for now, they are not under fire. Nor is there an explanation why it took so long for an investigation to be launched.

S&P also faces a financial blackball. On Wednesday, the City of Los Angeles fired S&P as a rater of its $7 billion investment portfolio and other governmental and corporate organizations may also do so. Without the fees from those ratings, S&P's livelihood may be threatened and their employees may lose their jobs. But as the U.S. government quickly sinks further into debt, which is happening even as you read this, S&P may hesitate in any additional downgrades, however warranted they may be. Shooting the messenger is an attempt to deceive you and me and it will not solve the U.S. government's severe debt problems.

Dick

To learn more, please see: "U.S. Inquiry Eyes S.&P. Ratings of Mortgages," The New York Times http://www.nytimes.com/2011/08/18/business/us-inquiry-said-to-focus-on-s-p-ratings.html?_r=1&nl=todaysheadlines&emc=tha2 and "Los Angeles fires Standard & Poor's from rating its $7 billion investments," Mail Online http://www.dailymail.co.uk/news/article-2027730/Los-Angeles-fires-Standard-amp-Poors-rating-7-billion-investments.html?ito=feeds-newsxml and "U.S. Probes Credit Raters," The Wall Street Journal, http://www.morningstar.co.uk/uk/markets/newsfeeditem.aspx?id=155144956493770