In response to the S&P decision to downgrade the U.S. credit rating, Rep. Brad Sherman (D-CA) a senior member of the House Financial Services Committee, released the following statement:
"They did this on the theory that Washington might deliberately refuse to pay its debt because of a political impasse. But I don't know what makes them experts at this," said Sherman. "S&P's main job is rating private issuers, and they have some expertise in that, although obviously they got it pretty wrong in mortgage-backed securities. In the parlance of finance; they gave Triple A to "Alt-A', but downgraded the USA. That is to say that until 2008 they gave their coveted triple A rating to non-prime mortgages but now they take it away from US treasuries. In this case you need to be a political scientist and not an MBA - and I don't know if they've got any political scientists over there."
Congressman Sherman has long argued that perhaps the single greatest cause of the financial meltdown was the decision of the credit rating agencies to give high ratings to bonds backed by questionable mortgages. In June, Sherman appeared before the conference committee on financial regulatory reform to encourage the adoption of a measure, which he proposed in the House and which U.S. Senator Al Franken (D-MN) introduced and successfully passed in the Senate. The Franken-Sherman amendment would require an independent agency to assign credit rating agencies impartially.