Los Angeles cuts ties with S&P after rating downgrade

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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.

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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