Rep. Waters Seeks SEC Probe, House Panel Hearings on S&P Downgrade

—–Original Message—–From: Siegel, GarySent: Thu 8/11/2011 11:07 AMTo: Sibayan, KarenSubject: RE:  Rep. Waters Seeks SEC Probe, House Panel Hearings on S&P DowngradeThursday, August 11, 2011By Lynn Hume WASHINGTON – Rep. Maxine Waters, D-Calif., has asked the Securities and Exchange Commission to investigate whether Standard & Poor’s disclosed its downgrade of U.S. debt to certain financial institutions before it made the information public.In a two-page letter dated Wednesday to SEC chairwoman Mary Schapiro, Waters said: “Given the historic nature of S&P’s downgrade, and the tremendous market volatility experienced after that downgrade, I feel it is appropriate for the commission to conduct an investigation.”She said the SEC should probe whether any institutions traded on the basis on nonpublic information about the downgrade.Waters also sent House Financial Services Committee chairman Spencer Bachus, R-Ala., a two-page letter asking that the committee conduct a hearing or a series of hearings on “the extent to which [Standard & Poor’s] downgrade was based on an objective analysis of U.S. debt dynamics versus subjective political analysis,” among other things.The committee also should examine: the impact of the rating agency’s using an incorrect Congressional Budget Office assumption in deciding to downgrade U.S. debt; the extent to which Standard & Poor’s and its parent, McGraw-Hill Cos., have firewalls to insulate their lobbying and rating activities; as well as the implications of the rating agency’s action and its historical performance, she said.In line with her request to the SEC, she asked that the committee examine whether SEC disclosed its downgrade to certain financial institutions before making it public.Waters is the ranking minority member of the House Financial Services Committee’s capital markets subcommittee.Rep. Maxine Waters, D-Calif., has asked the Securities and Exchange Commission (SEC) to investigate whether Standard & Poor’s disclosed its downgrade of U.S. debt to certain financial institutions before it made the information public.In a two-page letter dated Wednesday to SEC chairwoman Mary Schapiro, Waters said: “Given the historic nature of S&P’s downgrade, and the tremendous market volatility experienced after that downgrade, I feel it is appropriate for the commission to conduct an investigation.”She said the SEC should probe whether any institutions traded on the basis on nonpublic information about the downgrade.Waters also sent House Financial Services Committee chairman Spencer Bachus, R-Ala., a two-page letter asking that the committee conduct a hearing or a series of hearings on “the extent to which S&P downgrade was based on an objective analysis of U.S. debt dynamics versus subjective political analysis,” among other things.The committee also should examine: the impact of the rating agency’s using an incorrect Congressional Budget Office assumption in deciding to downgrade U.S. debt; the extent to which S&P and its parent, McGraw-Hill Cos., have firewalls to insulate their lobbying and rating activities; as well as the implications of the rating agency’s action and its historical performance, she said.In line with her request to the SEC, she asked that the committee examine whether SEC disclosed its downgrade to certain financial institutions before making it public.Waters is the ranking minority member of the House Financial Services Committee’s capital markets subcommittee.