Report: SEC asks S&P; for info on downgrade

By: Tucker Reals

(CBS)

(CBS News)

The Securities and Exchange Commission has reportedly asked Standard & Poors' management to hand over information on who within the credit rating agency knew about the pending U.S. downgrade prior to it being made public - the beginnings of a hunt for any potential insider trading, reports the Financial Times.

Read the FT article (site membership required)

According to the FT, the SEC - responsible for monitoring the practices of credit ratings agencies and financial institutions - has not received any indication that staff at S&P; leaked news of the looming downgrade before it was announced a week ago, nor have they discovered any stock trades which seem suspicious.

The downgrade, though widely expected, has sparked a week of turmoil on the world's financial markets.

Standard & Poor's two main rating rivals, Fitch and Moody's, have kept their ratings of the U.S. credit consistent, and some economists - and the Obama administration - have criticized the math and reasoning used by S&P; to arrive at the decision to downgrade. (Click on the video at left for more on this debate)

Tucker Reals
Tucker Reals is a senior news editor and overnight site editor for CBSNews.com, based at CBS News' London bureau.

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by alphaa10000 August 12, 2011 8:58 AM EDT: IT'S ABOUT TIME

The SEC action is long time in coming-- well before 2008, S&P falsely rated Wall Street white collar crime during the Bush term as an AAA activity, and said all was well.

This rating was issued about two years before the Wall Street scandal broke, when J.P. Morgan and Goldman Sachs began edging out of a conspiracy John McCain called a "casino".; Reply to this comment


by Martha12345 August 12, 2011 8:55 AM EDT: If only Turbo Tim had signed up at "Credit Report. Com". He would have known the trouble we were in.; Reply to this comment

by jtdev1 August 12, 2011 7:54 AM EDT

It's funny how many people are upset about S&P downgrading the USA.

If you or I were constantly maxing out our credit and the only way we could continue living was to keep asking for a credit limit increase, wouldn't you think that all 3 major credit reporting agencies would be lowering your credit score even though you've never missed a payment?

Why is everyone upset? It's the truth and yes the truth hurts.

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by alphaa10000 August 12, 2011 8:47 AM EDT: Your sanguine explanation about a massively damaging act by only one of three rating agencies is disingenuous, to say the least. Unless you are incredibly naive, you know insiders can make money on a fraudulent rating.

S&P is hardly impartial, despite its claim of non-partisanship. S&P twiddled its thumbs about US financial status throughout the soaring Bush deficits, and said nothing. It also said nothing during the Newt Gingrich budget impasse with Clinton.

Whereas, this budget impasse was resolved peacefully, and there is no basis for a downgrade-- unless you are prepared to claim the prior GOP deficits ($11.7 trillion + interest = an overwhelming portion of the current $14 trillion) are a suitable basis for downgrade. But where was your voice when Bush and a GOP congress were busy running the federal deficits into the stratosphere?

Nearly a decade ago, Bush VP Cheney told Treasury Secretary Paul O'Neill, "Paul, Reagan proved deficits don't matter." And during their two terms, the GOP proceeded to spend exactly as though they believed it--Bush nearly doubled the national debt on his watch.

The truth does hurt the GOP-- the party that created the debt-- quadrupling the debt from pre-Reagan days. But when the GOP hypocritically began to whine about deficit spending after Obama's election victory, it is clear the GOP has (1) no memory whatsoever of its own history (2) no moral integrity to condemn a fiscal policy it invented and (3) no sense of responsibility to bring about a budget that is fair to all Americans.

Recently, NYTimes conservative columnist David Brooks wrote a scathing condemnation of the GOP as a party "without moral decency"-- and most Americans apparently agree. Of all parties to the budget dispute, polls show the GOP held in lowest esteem.


by robbyr2 August 12, 2011 9:22 AM EDT: It is amazing how one's political philosophy can justify theft or dishonesty.

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by jscott418 August 12, 2011 7:33 AM EDT: Just think about what the Government pays in interest alone and this is a big deal. But let us stick it to S&P because their is a lot of rich people making money off the Government's bad spending habits.
This does not give any less significance to the fact that our Government is foolish with spending. At least the people at S&P know how to make money?; Reply to this comment

by MarineVet46 August 12, 2011 7:17 AM EDT

So, we're finally going to find out how much Boner and Can't or were paid to destroy our economy.

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by Mbbec August 12, 2011 9:44 AM EDT: And Paul Ryan.


by WitchBroom August 12, 2011 4:51 AM EDT: This is an interesting development. A few days after S&P announced the downgrade, some of their officials publicly, and quite foolishly, admitted that high ranking people at S&P were relaying giving advance info about the upcoming downgrade to several of their wealthy clients -- events that were happening days before S&P made their decision public.; Reply to this comment

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