Slipping back into bad financial habits | Aug. 9, editorial
S&P has not lowered standards
S&P has not lowered its standards to attract business, as a New York Times article claimed. On the contrary, last year S&P actually increased the amount of credit support required to achieve a AAA rating on commercial mortgage-backed securities.
Since S&P implemented its new methodology, there are no bonds to which it has assigned a AAA rating and another agency assigned a lower rating to the same bond. In fact, based on the dollar value of the transactions cited by the New York Times, 97 percent of the commercial mortgage-backed securities that S&P has rated since changing its methodology were rated the same as or lower than other rating agencies.
Concerning the issue of how credit rating analysis is funded, S&P and the vast majority of credit rating agencies have employed the issuer-pays model since the 1970s, when the Penn Central Railroad bankruptcy demonstrated the need for greater transparency in credit ratings.
The SEC, which regulates credit rating agencies, pointed out that the issuer-pay model has many benefits. It is unique in its transparency compared with the alternatives. It enables ratings to be publicly available and free of charge to all market participants and fosters more efficient debt markets and coverage of emerging companies.
S&P has made many changes since the financial crisis in order to strengthen its independence from issuers, monitor global credit risks and improve its methodologies. Based on what S&P learned, it changed the way it rates almost every type of security that was affected by the financial crisis, making it more difficult for securities to achieve high ratings.
Public disclosure of our ratings to a broad audience of market participants means our opinions are subjected to market scrutiny every day from every corner of the capital markets.
Paul Coughlin, executive managing director, global analytics and operations, Standard & Poor's, New York
Teachers cash in on failing kids | Aug. 11
Mend, don't end, tutoring
As the former assistant secretary of education for civil rights and an advocate of federal tutoring programs with Tutor Our Children, I am concerned by the alleged conflicts of interest brought to light in the Times article on educators running government-funded tutoring companies.
Through a provision included in the Elementary and Secondary Education Act called Supplemental Education Services, or SES, states are eligible to offer subsidized tutoring to low-income and minority students who are not receiving the individual attention and instruction they need in the classroom.
For so many children, federally funded tutoring services are nothing short of an educational lifeline in an otherwise failed education system. Equally as important, free tutoring is a statutory parental empowerment right for the families of Title I children who are trapped in failing schools. These are exactly the students who need the sort of personalized academic attention tutoring provides in order to close the achievement gap.
Because ethics concerns have been brought to light in Florida, it is imperative that the SES system is reformed not just on a state-by-state basis, but nationally so students can continue to receive the critical instruction they need while bad actors are prevented from exploiting the program for private gain.
As the national debate continues in Congress to reauthorize the Elementary and Secondary Education Act, it is imperative that SES and free tutoring services are restored and that the program is included, with reforms, in the bill that ultimately reaches the president's desk.
Stephanie Monroe, Washington, D.C.
War on poverty' not sustainable Aug. 12, letter
Assistance in many forms
I would like to take issue with the letter writer who questions the logic of assisting the poor, calling them "captives of government" and "nonproducers" and citing U.S. Census data that show 49.1 percent of American households are receiving some form of government assistance.
What types of assistance are we talking about? Our national poverty rate hovers at approximately 16 percent, so we are really just talking about food stamps and Medicaid? We are also talking about Medicare and Social Security. Are we suggesting that the elderly who have paid taxes their whole working lives suffer from "a sense of entitlement"? Does this same percentage include retired military and veterans of war receiving disability pensions and VA services? I'd hardly include those as "gimmes."
What about the full-time working poor who still need help making it — so that the rest of us can get low prices at big-box stores? Considering that CEO compensation hit an all-time high last year, while many American households are considered low-income, I think we as a society need to be careful about the language we use — government assistance, handouts, takers, nonproducers, etc.
What we don't want to see as decent caring Americans is "the haves" turning the "war on poverty" into a war on the poor.
Tamara Craddock, Brandon
Russia's antigay law hazy | Aug. 13
Under Vladimir Putin's leadership in Russia, the Orthodox Church has assumed an increasingly important role. The new antigay and blasphemy initiatives may be the first of many religious dogmas to be forced on the Russian people.
Is Putin using the church, as Adolf Hitler did in the 1930s, to consolidate power and become the new czar? As Napoleon said when he reinstated the Catholic Church as the official state religion in France, "Religion is great stuff for controlling the common people." This is a glaring example of why separation of church and state is so important.
Frank Prahl, St. Petersburg