According to this great NY Times article, Standard & Poor’s–which was caught sleeping during the financial crisis in ’08–is now reacting to the government’s effort regulate the rating agencies by downgrading U.S. Treasuries. Â The article’s theory is that the S&P is trying to extort the government by tying U.S. Treasuries’ ratings to the amount of scrutiny the rating agencies receive. Â I have no doubt that this is the case.
For some reason, S&P is trying to throw the world economy into a clothes dryer to vindicate its wishes of autonomy. Â If so, S&P could, theoretically, be violating federal securities laws by manipulating treasury securities prices for its own gain.
This shows how bogus and petty the agencies can be. Â The government should double down on its efforts to regulate/prosecute S&P.
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