As Dean Baker points out, yesterday’s stock market decline was likely due to poor earnings reports from Bank of America ( Friday) and Citigroup (Monday). Not from S&P. Future profits for our bailed-out banks don’t look so good.
It is also worth noting that S&P has a horrible track record for judging credit worthiness. It rated hundreds of billions of dollars of subprime backed securities as investment grade. It also gave Lehman, Bear Stearns, and Enron top ratings right up until their collapse. Furthermore, no one was publicly fired for these extraordinary failures. Investors are aware that S&P’s judgement does not mean very much.
Why can’t we hang these banks out to dry?
How come Wall Street’s own kiss ass ratings gang whose heads were deep in the sand when the recession began,now rise from the sewer to run the nation’s finances. What about investigating S&P’s role in the recession?