Standard and Poor's: Downgrade Backlash?

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Critics in and out of government returned fire at the credit rating company rhetorically after it downgraded the U.S. Competing ratings agencies Moody's Investors Service and Fitch Ratings have affirmed the country's AAA rating. Most recently, Fitch reaffirmed the rating on Tuesday.

Even as S&P issued new rating downgrades from AAA to AA+ against municipal entities backed by federal leases in Miami, Atlanta and Tacoma, Wash., according to Bloomberg.

A committee aide said the Democrat-controlled body "is looking into the issue and gathering more information" but emphasized that so far there was no official committee probe or investigation.

Standards & Poor's Rating Service has been grading corporate bonds for 90 years. Today, it has 1,226 employees and does $75 million in business every year in more than 20 countries.

But Jules Kroll, one of its main critics, who started his own, smaller rating service, says S&P is not big enough to judge 100 countries because it has only about 100 actual analysts.

"Doing analysis of the economy of the United States and its likelihood of default is something that requires enormous resources that go far beyond the resources of S&P," Kroll said.

S&P missed the Enron crisis, giving the failed company high ratings until the day it went bankrupt. In 2008, it gave an AAA rating to toxic waste mortgages. Then, it gave an A rating to Lehman Brothers just before the investment bank went under. It also failed to sound the warning about the serious economic troubles in Ireland, Spain and Greece.

New York University professor Lawrence White said S&P had a valuable opinion, it just carried too much power.

"I wish that S&P were just another voice among the multitude of voices rather than this specially enhanced voice," White said.

Despite the anger at S&P, critics have argued that it is merely the messenger, and that the government is to blame for not getting its fiscal house in order sooner.

"If we were running our affairs properly, we wouldn't have to worry about S&P, Moody's and Fitch," said Paul O'Neill, referring to the three major rating companies. O'Neill served as Treasury secretary under President George W. Bush.

ABC News' Jim Avila, Sunlen Miller, Michael S. James and Eileen Murphy contributed to this report.

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