Elkin Urges Ratings Agencies to Stop Rating U.S. Debt

October 23, 2011 by · Leave a Comment
Filed under: General, The Rating Agencies 

Larry Elkin, President of Palisades Hudson Financial Group, LLC, wrote on the company’s web site that the Security and Exchange Commission (SEC) is abusing its investigative power. He believes two SEC inquiries into Standard & Poor’s (S&P) to be retaliation for lowering the rating on U.S. debt. These SEC investigations deal with whether S&P had improperly rated mortgage-backed securities and if there was insider trading over the U.S. downgrade.

Mr. Elkin agrees that the SEC’s mortgage-backed securities investigation predates the downgrade; nonetheless he questions whether these actions by the SEC had, “…nothing to do with the actual decision by S&P to cut Treasury’s rating. Administration officials and its SEC appointees would never dream of retaliating against a rating company for honestly expressing its constitutionally protected opinions. We know this because, though they will not say anything for attribution, they say so in all the stories reporting on their inquiries.”

Mr. Elkin says the SEC’s refusal to say anything for attribution is “baloney” and urges all the rating agencies to, “…withdraw its rating of U.S. government and agency debt. They should explain that government investigations render them unable to express an independent opinion. As a result, the government will end its tenure as a AAA-rated credit risk, not by having its ratings reduced (except for S&P), but by having them eliminated.”

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