Los Angeles, which recently saw its $7-billion investment portfolio downgraded by Standard & Poor’s, has decided to no longer hire the rating company to rate the soundness of the city’s investments.
“We have really lost faith in S&P’s judgment,” Interim Treasurer Steve Ongele said.
After its downgrade of U.S. debt last week, S&P cut its rating of L.A.’s general investment pool to AA from AAA. It also downgraded dozens of other municipalities with large investments in U.S. Treasury notes.
One of them, Northern California’s San Mateo County, has decided not to renew its contract with S&P. Florida’s Manatee County has also dropped its contract with the company, according to news reports.
Speaking before the City Council’s Budget and Finance Committee meeting Monday, Ongele said Los Angeles should be proud for cutting ties with S&P.
Join the official YWN WhatsApp status
2 Responses
Why would anyone ever trust a rating from a company that is being paid to do the rating by the firm be rated. The rating agency competes by offering to give the best rating. An analogy is buying a product because some celebrity is making an endoresement, knowing the only reason the person is making an endorsement was a large fee given by the company marketing the product.
If the rating companies want to be believed, they should sell their ratings and not accept money for the people being rated.
Kill the messenger