S&P as the decider?

July 24, 2011

By Matthew Goldstein

Derivatives guru Janet Tavakoli is a long-time critic of the rating agencies and in particular the role the raters played in the subprime debt crisis. And she says given the shabby job the rating agencies did in giving the green light to the subprime debt boom, it’s odd to think of firms like Standards & Poor’s playing such a big role in the ongoing US debt ceiling negotiations.

“Standard & Poor’s lost its credibility due to a long history of misrating financial products,” says Tavakoli.

The Chicago-based consultant, for now, isn’t taking position on how the on-again/off-again political wrangling in Washington over raising the debt ceiling should be resolved. But she said investors would be better off ignoring what the raters–in particular S&P–have to say on the matter.

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