"Over the past weeks and months the President repeatedly called for substantial deficit reduction through both long-term entitlement changes and revenues through tax reform, with additional measures to spark jobs and strengthen our recovery," press secretary Jay Carney said in a statement.
"That is why the President pushed for a grand bargain that would include all of these elements and require compromise and cooperation from all sides."
It may be no surprise that the most powerful, albeit not the most ardent, supporter of Wall Street lost no time bolstering the credibility of one of the firms most responsible for the financial meltdown of 2007-2008. On April 13, as Kerri Panchuk reported
The Senate Permanent Subcommittee on Investigations released findings from a two-year study this week, saying "inaccurate triple-A credit ratings" from Standard & Poor's and Moody's Investors Service introduced risk into the financial system and "constituted a key cause of the financial crisis."
The report went a step further alleging that massive downgrades made by the credit ratings agencies a few months before the financial meltdown "precipitated the collapse of the residential mortgage backed-securities and CDO secondary markets" since the changes were "unprecedented in number and scope." The report added that "more than any other single event (the downgrades) triggered the beginning of the financial crisis."
Joan Hamsher, in one of Firedoglake's recent analyzes of the political underpinnings of S&P's decision-making process, notes
Two days later, David Beers reached out to Undersecretary Goldstein to let Treasury know that the Standard and Poors committee has changed its outlook to “negative.” On April 18 Standard and Poors issued press release downgrading the outlook for US sovereign debt from stable to ngative and giving a 30% chance of a ratings downgrade from AAA to AA.
In another blow to the prima donna industry, on May 18, the Securities and Exchange Commission voted to propose what it termed "new, tougher regulations for credit agencies." And just last Tuesday, Hamsher adds, "the SEC unanimously approved a plan to erase references to credit ratings from certain rulebooks. They also adopted alternatives to the credit ratings."
The sordid, recent history of Standard & Poors suggests that the agency was motivated not by economics, but by politics and self-interest. As the story unfolds, it should become clear, as Paul Krugman summarized
S&P is just making stuff up — and after the mortgage debacle, they really don’t have that right.
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