Did the rating agency punish U.S. for Dodd-Frank bill?

AMY GOODMAN:  What about the credit agencies, the rating agencies?

MICHAEL HUDSON: They have played a very bad role in this. Here’s what happened. Under the Frank—the bank reform—

AMY GOODMAN:  With Congress Member Frank.

MICHAEL HUDSON: —the credit rating agencies were changed. The government was very angry at them for giving AAA ratings on junk, and their defense in courts saying, "Well, yes, we gave AAA ratings on junk mortgages, but they’re legally only opinions." So the Dodd-Frank bill said, "You rating agencies are liable for your opinions." Well, that—the rating agencies said, "We want to make money on selling our opinions, and we don’t want to have to take any responsibility for them, so we’re going to get you. We’re going to threaten to downgrade the U.S. government, until you say, 'OK, we don't want to hear your risk assessments anymore, because you’re hurting us.’"


But the proper response is to say, look, the rating agencies are just out to make money selling their opinions that are up for sale. The rating agencies are trying to get brownie points with Wall Street for opposing Social Security, for essentially yelling fire when there isn’t any fire. And at the same time, they want to weaken the Dodd-Frank bill so that they don’t have to ever be liable for making a warning about a country and they can continue to go back to giving AAA ratings for junk, which is how they make their money.
http://www.democracynow.org/2011/8/2/after_months_of_partisan_wrangling_wall



Was S&P downgrade an act of revenge?
It's hard to view the monumental ratings downgrade in context without understanding the long-running feud between the government and ratings agencies.  In April, Sen. Carl Levin, D-Mich., issued a scathing 650-page report contending that malfeasance at ratings bureaus like Standard & Poor’s was as much to blame for the housing bubble as any bank, and included a series of smoking gun e-mails that suggested that the firms knew they were profiting from unethical behavior.  A little-known section of the Dodd-Frank financial reform bill also hits the rating agencies with new limits destined to undercut their lucrative business;  the Securities and Exchange Commission is discussing right now just how to implement the new rules. The public comment period on new rules ended Monday.


Is the timing a coincidence? Or could the ratings downgrade from Standard & Poor’s be viewed as a shot back at a government that's been taking plenty of shots at the ratings industry lately?


http://redtape.msnbc.msn.com/_news/2011/08/09/7321296-was-sp-downgrade-an-act-of-revenge