By Ralph Nader
Deven Sharma, President, Standard & Poor’s
Ray McDaniel, CEO Moody’s Corp
Stephen Joynt, CEO Fitch’s Ratings
Dear Mr. Sharma, Mr. McDaniel and Mr. Joynt;
You have each indicated that the time may be near for a downgrade of the credit rating of the United States government, with all the negative and uncontrollable consequences that flow from such private corporate decisions.
Your rating agencies have disgraced your calling well beyond the conflict of interest built into your business (i.e. that you are paid for your ratings of financial instruments by the issuers themselves). In short, you are rewarded for what is a statutorily-secured business of trust by the very companies who want favorable ratings. Needless to say, as reported in leading newspapers such as The New York Times and Wall Street Journal, you repeatedly debased your calling during the years leading up to and including the 2008-2009 Wall Street economic collapse.
Now your lobbyists are pressing members of Congress to weaken further the provisions affecting rating agencies in the Dodd-Frank law in ways that will raise the risk-consequences for the savings and investments of innocent people. See the strong critique of your looming downgrade by arch-conservative columnist Holman W. Jenkins in the January 27, 2011 Wall Street Journal titled, “Who Elected the Rating Agencies?” Mr. Jenkins wrote that not only are your caveats overblown, but he concluded that, “it is foppish in the extreme of S&P to imagine its opinion is needed or valued, and one more reason to expedite a rare useful provision of Dodd-Frank – it’s requirement that federal law be purged of language requiring investors to act on the opinions of rating agencies.”
You have placed yourself in a position to shake the foundations of the U.S. government’s credit with global ramifications and impacts on interest rates, among other damages, based on criteria developed by unaccountable analysts on your payroll operating under your private command. You should never have been given this quasi-government power.
You must exercise levels of caution and respect to which you are unaccustomed. You are playing with fire. Millions of Americans who never heard of you will be wanting to know who put into motion these latest assaults on their livelihood. The United States government is not in such serious straits to warrant the extremes you are contemplating. The United States is not Greece! Take note of that as you consider what you are going to do individually or collusively in a contemporary reality where you are over your head in hubris.
Ralph Nader and Rob Weissman, President of Public Citizen