Los Angeles cuts ties with S&P after rating downgrade

Standard & Poor's headquarters in the financial district of New York. Los Angeles severed its ties with the agency after they lowered the city's rating from AAA to AA.
Standard & Poor's headquarters in the financial district of New York. Los Angeles severed its ties with the agency after they lowered the city's rating from AAA to AA. Stan Honda/AFP/Getty Images

The city of Los Angeles will no longer hire Standard & Poor's to rate its $7 billion general investment pool because the firm recently downgraded the city's portfolio from AAA to AA.

Interim Treasurer Steve Ongele said the city has lost faith in S&P's judgment.

The Los Angeles Times reported that Ongele told the City Council's Budget and Finance Committee this week that the city should be proud for cutting ties with S&P.

He noted the market crash that came with the real estate debacle occurred because rating agencies like S&P gave unworthy corporations AAA ratings.

Ongele said canceling the contract will save the city $16,000 a year.

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