When the President Does It, It Isn’t Illegal
A question for our Andrews — Stuttaford and C. McCarthy:
If I were to try to convince a securities-rating firm not to disclose potentially damaging information about the finances of a corporation in which I had an interest, would that not be a crime? If the firm obliged, would not the SEC look askance?
Even though the White House has publicly downplayed the credit warning issued Monday from a leading agency, Obama administration officials were privately trying in recent weeks to convince Standard & Poor’s not to lower its outlook for U.S. debt from “stable” to “negative,” Fox News has confirmed.
S&P, bear in mind, is at the mercy of the federal government for its livelihood: Regulated institutions are required to use federally recognized credit-ratings agencies — it’s not AAA unless a Washington-approved firm says it’s AAA. If Washington should decide that S&P no longer qualifies to be a member of the ratings cartel, it’s basically out of business. It’s one thing to have an angry client threaten to take away his business, but a very different thing to have an angry government with the power to shut your business down making demands.