At this point, we all know that we lost our top rating (AAA) from Standard & Poor’s, the financial ratings agency based in New York. Though it was made official last night, officials from S&P planned to make the announcement yesterday while markets were still open. They didn’t though. Why? When S&P went to the Treasury, officials there pointed out a $2 trillion dollar error in their math. And this isn’t coming from a lefty rag, this is coming from the Wall Street Journal. Even after being confronted with the error, they still proceeded with their downgrade.
This is the same firm that was rating what were essentially junk bonds as investment grade, and that inaccurate information was a core reason that the economy collapsed in as spectacular a fashion as it did in 2008. That the guys at S&P to get something this big this wrong, well it seems to be their new business model. If I were the head of the SEC’s Enforcement Division, I’d be foaming at the mouth to launch an full blown investigation as to the degree of their collusion with Wall Street in forming such toxic assets and then passing them off to the American public. And when you make representations that you know to be false in a commercial setting, that has a name: fraud. From a legal standpoint, if I were the General Counsel of S&P, I would have handed in my resignation yesterday. I, for one would love to see some indictments handed down. S&P gets one thing wrong that blows up the economy, and then they get another thing wrong that could blow up the deficit. These guys are nothing more than crooks in suits.