WASHINGTON, D.C. Aug. 10, 2011 (DPI) — He’s neither polished nor terribly charismatic, and he certainly — and perhaps intentionally — comes across on television as an expressionless bureaucrat.
Credit analyst John Chambers last weekend became the public face of Standard & Poor’s, the 150-year-old credit-rating agency that has crossed swords with Uncle Sam by lowering the government’s AAA debt rating to AA+.
As many now claim, the ratings downgrade may be largely symbolic: the U.S., if not its government, certainly has robust means to repay its debts, and Treasuries remain every bit the global safe haven they were a week ago, prior to the Aug. 5 downgrade. Further, S&P, still embarrassed by the AAA ratings it slapped on complex structured investments that went bust in recent years, must vigorously defend itself over the downgrade in the media.
Standard & Poor's Managing Director John Chambers
But defying and challenging the U.S. government in this fashion has few precedents. One example is the actions of The Washington Post, back in 1972, when the late Katherine Graham courageously approved the publishing of evidence of White House corruption stemming from the Watergate break-in and cover-up. Her decision — in the face of huge criticism and pressure — brought down a president.
No one will be comparing John Chambers — already confused with the tech-company CEO of the same name — with the courtly, well-connected newspaper publisher anytime soon.
Yet their decisions to reveal the emperor’s lack of clothes certainly have parallels, apparent even a week after S&P announced its downgrade.
For starters, the hostile reaction from the White House — and Washington attempts to discredit S&P’s accounting — all suggest that S&P has a good argument for its downgrade. Graham and the Post, too, faced the same hostility — only worse, according to historians.
Rupert Murdoch’s New York Post seemed to try to discredit S&P by suggesting that Chambers, a mild-mannered midwesterner with a BA in literature and philosophy from Grinnell, was somehow unqualified to make a judgement. The NY Post did provide a link to S&P’s bio of Chambers, which noted he is also he is a chartered financial analyst, a certification that still carries prestige in this over-credentialed age.
For now, S&P hasn’t faced a business backlash. That may in part stem from the fact that its downgrade is so in keeping with the polarized and deeply contentious political climate of the day, the great national disillusionment over Washington’s capacity to govern. As Robert Samuelson wrote in The Washington Post this week, “this downgrade is mostly about politics — a sense in which S&P is undoubtedly right.”
As Chambers and his sovereign debt committee wrote in their opinion: “The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.”
Prior to the downgrade, reader comments supported what at the time were S&P’s threats of a downgrade. Wrote one on WSJ.com: “I hope S&P does downgrade US debt based on a $4 trillion criteria. It would show uninformed voters, and the Congress that these current bills are nothing more than gamesmanship. Smoke and mirrors with no real change to the underlying problem.”
http://blogs.wsj.com/marketbeat/2011/07/28/sp-rating-chief-more-or-less-sticks-by-4-trillion-deficit-reduction-number/
Of course, there are big differences between a First Amendment-protected newspaper reporting embarrassing facts and a rating agency rendering an opinion on a country’s creditworthiness. And there are other reasons historical comparisons may never emerge.
For one thing, Standard & Poor’s, in keeping with its culture, will do little to promote Chambers or any other individual going forward. The organization obviously wants to maintain an institutional face. Further, its personnel will never be confused with publicity hounds: it is staffed by rumpled financial analysts who lacked the credentials or connections to wind up at better paying investment banks, and it is managed by those analysts who stayed and absorbed the over-serious, pseudo-regulator personality typical in a Wall Street rating agency. (It’s a culture that seems to endure post-2008, when the endemic conflicts of rating the securities of your paying clients finally drew public attention.) Like many senior analysts, the 55-year-old Chambers is an S&P lifer.
Restoring a AAA rating by a sovereign typically takes nine to 18 years, Chambers told ABC News this week.