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S&P Balks At SEC Plan To Reveal ‘Errors’

From a wildly cheering (for the SEC) Reuters:

The U.S. Securities and Exchange Commission is creating a workspace for investigators with their new Office of Market Intelligence, where they will be able to watch market traffic on computer terminals at SEC headquarters in Washington, June 24, 2011.

S&P balks at SEC proposal to reveal rating errors

By Sarah N. Lynch | Reuters
August 10, 2011

WASHINGTON (Reuters) – Standard & Poor’s, whose unprecedented downgrade of U.S. debt triggered a worldwide stocks sell-off, is pushing back against a U.S. government proposal that would require credit raters to disclose "significant errors" in how they calculate their ratings.

S&P, which was accused by the Obama administration of making an error in its calculations leading to Friday’s downgrade, raised concern about the proposed new corrections policy and other issues in an 84-page letter to the Securities and Exchange Commission, dated August 8.

An 84 page letter? They must have been annoyed.

Still, the nerve of S&P fighting back. They should just admit whatever the government accuses them of, and beg for forgiveness.

The SEC is weighing sweeping new rules designed to improve the quality of ratings after their poor performance in the financial crisis.

The SEC wants to make sure these agencies come out with the credit ratings they want. They want them to be dependable — like the Congressional Budget Office.

The 517-page proposal includes a requirement that ratings agencies post on their websites when a "significant error" is identified in their methodology for a credit rating action.

By the way, can you imagine the government ever doing this?

For instance, when Medicare was first proposed in 1965, the CBO projected it would cost (only) $12B by 2011. In fact, Medicare is now costing $120B a year. The CBO was only off by a factor of ten.

Isn’t that a "significant error"? Shouldn’t that be posted somewhere?

The letter was sent three days after the U.S. Treasury Department accused S&P of miscalculating — by some $2 trillion — the U.S. debt in the next 10 years…

S&P vehemently denied it had made an error, but acknowledged that it changed its long-term economic assumptions after discussions with the Treasury Department. It switched to another economic scenario that resulted in a debt load $2 trillion smaller by 2021. But it said that did not affect its decision to downgrade the U.S. debt.

This so-called "error" was simply the result of S&P using calculations based on five year projections instead of the ten year projections the CBO prefers. And never mind that five year projections tend to be far more accurate.

S&P’s criticism of the "significant error" proposal is part of a broader concern that the SEC’s reforms prompted by the Dodd-Frank financial oversight law could give the U.S. government undue influence over its ratings decisions.

That was the plan all along.

Of the big three raters — S&P, Moody’s Corp and Fimalac SA’s Fitch Ratings — S&P was the only one to raise major concerns in its letter to the SEC about the "significant error" provision.

Maybe because they are the agency with the target on their backs.

The measure was tucked into Dodd-Frank after the rating firms gave glowing ratings to toxic subprime mortgage-backed securities and then were slow to downgrade them.

A Senate investigations panel issued a report earlier this year faulting S&P and Moody’s for triggering the financial crisis with their flawed ratings and subsequent decision to downgrade them en masse

Oh, yeah. S&P caused the financial crisis.

They are also behind global warming.

This article was posted by Steve on Wednesday, August 10th, 2011. Comments are currently closed.

12 Responses to “S&P Balks At SEC Plan To Reveal ‘Errors’”

  1. Dupree says:

    Democrats blaming S&P for this economic turmoil is like saying the amber alert is to blame for child abductions.

  2. tranquil.night says:

    Don’t piss off the Death Star or you’ll get the Death Stare.

  3. oldpuppydixie says:

    Criminal intimidation by any other name…..

  4. proreason says:

    Michael Moore wants S&P arrested.

    That’s all you need to know.

  5. Chinnubie says:

    Well until the schools start actually teaching the proper education in this country can we really think anything will truly change? If I don’t pay my bill the credit agencies begin to downgrade me how can anyone not understand what’s going on with S&P? I mean we are dealing with collosal retardation, I mean I think I would take a chance on letting a retarded person, oops mentally challenged, run the country at this point, what do we have to loose? We are living in an alternate reality, can anyone doubt that what’s going on is being done on purpose? I know it’s hard to admit that any President would do to this country what he’s done seems impossible but, no longer can there be any doubt!! 2012 can’t get here fast enough…..

    • Right of the People says:

      If we can impeach Barry then we CAN have a retard running the country, Bite Me Joe. Frankly he’d do a lot less damage since he’s not evil like the Oster, just stoopid.

    • Rusty Shackleford says:

      “I mean we are dealing with collosal retardation”

      There, fixed it for you.

  6. Liberals Demise says:

    Does anyone or any power that be; tell the truth?
    It use to be that we cared enough…..never mind…..they just don’t give a damn
    and never did!! I am sick up and fed of all the lies told over the last 3 years.
    Gawd, I need a beer!

  7. Rusty Shackleford says:

    At the end of the day, after the dimwits, whiners and psychos get done stirring up dust and it all settles, the downgrade will stick. The next tactic, if it’s not happening already will be the racist tune. “They just have it in for Obama because he’s black and he made them mad because he (rightfully)scolded them.”

    But the downgrade will stick and will be the one thing the rewriters of history will try desperately to not put in their fawning love-tales about the inept, incapable, man-child president. Students who come from smart families will look at histories of presidents and note the glaringly lack of critical statements about the big zero. They will possibly ax their teachers hows com dat iz and the teacher will reply with a statement that will make no sense at all.

    The student will then go home and possibly get the facts from their parents, or, not, depending on the parents they have and if they got the truth, the student will raise their hand, and then tell the teacher what their parents told them. Then, the student will start getting poorer grades and will eventually have to be moved to a different school because the parents, wanting to know why the teacher suddenly started wrecking their kids’ GPA, will find a teacher, and a school administration, possibly an entire school board that will not see things the parents’ way.

    If ever there was an argument for private education, that would be it. I’m not just thinking out loud here; Past behavior by Wisconsin teachers, among others and their warped, twisted way of doing things has served to undermine real, factual, thinking education in our schools. Not all but many or most. The damage will be ongoing.

    The record of President “Oh Yes I Will” stands on its own as the worst ever by any president in the history of the US. Joblessness, government takeovers, manipulation of the law by the DOJ, the terrorist trial issues, the constant vacationing, golf, admonishment by a class-less chief executive (Even Johnson had more class, which isn’t saying much), his finger-wagging at those he finds objectionable, etc., etc.

    Like Comic Book Guy on “The Simpsons” might say, “Worst president….ever!”


  8. tranquil.night says:

    Regarding the uptick rule and naked short-selling, the first is not in play as was discussed on Rush.

    Naked short-selling isn’t exactly illegal, but it is supposed to be well-regulated since 2008, especially of big institutions and market makers who take aggressive naked shorts during crisis times to prevent situations like the sudden, I’d argue targeted, run on Lehman. Failure to deliver shares in a naked short sale will get you heavily fined.

    But as the S&P is learning, the SEC isn’t exactly operating on the principles of law and economic security as much as politics. And we got international market makers like Goldfinger out there trying to work outside the bounds of our regulators.

    Santelli had an awesome set with Sean today. He’s been on fire lately.

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