House panel probes background of S&P decision on U.S. credit
A House investigative committee is inquiring about discussions held by Treasury Department officials with Standard & Poor’s before the credit rating agency lowered its outlook on the United States last week.
Rep. Randy Neugebauer (R-Tex.), chairman of the oversight and investigations subcommittee of the House Financial Services Committee, expressed concern that officials might have tried to unduly influence the S&P decision and asked for a host of documents about the Treasury’s contacts with the rating agency.
“While it may be commonplace for companies and governments that solicit ratings to ‘push back’ when they don’t agree with decisions made by credit rating agencies, the appropriateness of the federal government protesting ratings changes is a bit more ambiguous given its regulatory and oversight role over the agencies,” Neugebauer wrote in a letter addressed to Treasury Secretary Timothy F. Geithner.
Neugebauer asked for copies of all communication between Treasury officials and S&P and all notes related to that communication.
The Treasury declined to provide immediate comment.
Neugebauer’s letter comes amid an escalating conflict between House Republicans and the Obama administration over dueling proposals to rein in the nation’s debt.
S&P threw fuel on that fire last week when it said it would lower the nation’s long-term credit outlook to “negative” from “stable” — an indication that the country could lose its crucial AAA rating if the soaring federal debt is not brought under control.
The Washington Post reported that the Obama administration had privately urged Standard & Poor’s not to lower its outlook on the United States. The Treasury told S&P that it was underestimating the ability of politicians in Washington to fashion a compromise to curb deficits.
But S&P analysts told the Treasury last week they did not think an agreement was likely —and released a report that was skeptical about whether Democrats and Republicans would concur on how to bring spending in line with revenue.
Neugebauer also asked for information about the Treasury’s public response to the S&P report. Geithner had said last week that the agency was “absolutely wrong” to change its outlook and that there is “no risk” of an actual downgrade.
“I am worried that the Treasury Department under your leadership may not be sufficiently concerned with our ballooning national debt and deteriorating financial condition,” Neugebauer wrote in the letter.