Washington, DC, United States (AHN) – The House oversight and investigations subcommittee of the House Financial Services Committee is investigating the discussions made by Treasury officials with Standard & Poor’s prior to the rating agency’s downgrade of the U.S. debt to negative last week.
Rep. Randy Neugebauer, chairman of the subcommittee, said the officials may have exerted too much pressure on S&P. He sought documents regarding the meetings.
Neugebauer pointed out in a letter to Treasury Secretary Timothy Geithner that while it is common for companies and governments to push back when they don’t agree with a rating agency’s decision, there is a question of propriety since government has regulatory and oversight functions over the rating agencies also.
S&P, before downgrading the U.S. rating, informed Washington that the country risks losing its AAA credit rating unless policy makers agree on a deficit and debt reduction plan by 2013.
It was the first time for the U.S. credit outlook to be questioned since 1995 and 1996. At that time there was a disagreement between President Bill Clinton and House Speaker Newt Gingrich, which led to government shutdowns. Fitch placed the U.S. debt rating on negative watch from November 1995 to spring 1996, while Moody’s placed some U.S. government bonds on review for a possible downgrade in January 1996.