S&P Under Suspicion

The investigation opened by the United States Department of Justice into credit rating agency Standard and Poor’s does nothing more than confirm two predictions: First, that Barack Obama’s administration was not going to sit around twiddling their thumbs after U.S. debt lost its AAA rating and second, that there are grounds to suspect that S&P and its sister agencies, Moody’s and Fitch, are both the judge and the jury when it comes to the issuing of financial solvency ratings. Although the U.S. government asserts that it opened the inquiry before S&P downgraded its debt, it seems safe to infer that the action taken by the agency has been a definitive catalyst to the acceleration of the inquiry. It seems the three great rating agencies will have to give lengthy explanations in order to avoid falling into discredit of their own.

If has been confirmed that if it was S&P executives who insisted on maintaining a high rating of products derived from subprime mortgages against the opinion of their analysts, the agency would find itself in a case of falsifying information. This happens in the same way that, if in Italy it is confirmed that the agencies promoted the increase of the country’s debt, there would be little doubt that they artificially altered the price of financial assets. In light of these two cases, S&P would be obliged to change the rules of the game and “control the controllers” — the agencies, that is — which, up until now, have managed the oscillations of the markets according to their whims.