Standard & Poor’s Downgrades Outlook On US Debt

-Submitted by David Drumm (Nal), Guest Blogger

You remember Standard & Poor’s, they’re the credit-rating agency that blessed the fraud-based mortgage securities issued by Wall Street banks with AAA ratings, deceiving gullible investors around the world. Senator Carl Levin (chair of the Senate Permanent Subcommittee on Investigations) recently named this company a “key cause” of the economic crisis.

The ratings agencies are paid by the banks to do their ratings. If a ratings agency doesn’t come up with a AAA rating on an investment, the bank will take its business elsewhere. The ratings agency will not make as much money and the executives will take home smaller bonuses. According to the Permanent Subcommittee on Investigations:

Competitive pressures, including the drive for market share and need to accommodate investment bankers bringing in business, affected the credit ratings issued by Moody’s and Standard & Poor’s.

On April 18, S&P downgraded its outlook on a debt partially incurred by the bailout of the same financial institutions that S&P vouched for. Oh, the irony.

Interestingly, the dollar gained on April 18 while the euro, the dollar’s chief competitor, lost. Maybe the financial markets showed their confidence in an S&P rating. Anyone gullible enough to accept an S&P rating deserves what they get.

H/T: AP, Richard D. Wolff.