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“Fitch sometimes utilizes lobbyists, but such corporate matters are completely separate from and have zero influence upon our analytical groups that assign ratings,” company spokesman Daniel J. Noonan said in a comment echoed by officials at Moody’s and S&P.
At the same time, top executives and analysts at all three agencies have made tens of thousands of dollars in campaign contributions in recent years, with slightly more than half the money going to Democrats. S&P President Deven Sharma, for one, donated $9,000 to candidates between 2007 and 2009. The money went to half a dozen candidates, including Sen. Rob Portman (R-Ohio) and ex-Sen. Chris Dodd (D-Conn.).
“It’s not a whole lot of money, but obviously they are no strangers to fund raisers and the chance to mingle with politicians,” Sunlight Foundation Editorial Director Bill Allison said. He added: “Whenever I hear a company say that it has a solid Chinese wall, I’m always skeptical.”
Despite fielding a share of the blame for the fiscal crisis of 2008, ratings agencies have successfully helped slow or block a long list of new regulations under the year-old Dodd-Frank law. These include measures aimed at improving rating agencies’ transparency and accountability and ending potential conflicts of interest between analysts who are paid by the companies they rate.
“We’re in danger of seeing none of them really work to address the problems that were revealed in the financial crisis,” said Marcus Stanley, policy director of Americans for Financial Reform. “And the credit rating agencies are still one of the most profitable industries in the United States.”
On Capitol Hill, the S&P downgrade has set off a new wave of criticisms and scrutiny. The Senate Banking Committee is reportedly gathering information on S&P, and hearings could follow. Rep. John Tierney (D-Mass.) has called on House Oversight and Government Reform Chairman Darrell Issa (R-Calif.) to hold a hearing to examine the motivations behind the downgrade.
The panel should examine “what is the motivation, what is the credibility and what is the capacity of these organizations,” Tierney said. “And should they be put in the position of being able to have outsized influence in the political process, not just the financial process.”