By Peter Schroeder - 04/24/12 08:01 PM EDT
"Egan-Jones believes that the SEC's action is inexplicable except as an effort to silence Egan-Jones and maintain the status quo of a conflicted, issuer-paid ratings agency monopoly," the firm said in a statement.
The rater touted its status as an independent rating agency, as opposed to the major raters that provide ratings in exchange for payment from issuers. It also trained its fire on the three top raters, arguing that they should be the ones facing federal scrutiny for their role in the financial crisis.
"The damage done by the large issuer-paid firms, which have a monopoly on the industry, is incalculable," it said. "Congress has found that the large issuer-paid firms were instrumental in creating the inflated and erroneous AAA ratings, for billions in profits. ... The SEC has not suggested that it will ever take any action against these firms for their role in issuing conflicted, erroneous ratings which, as Congress found, contributed significantly to America's economic crises."
Egan-Jones garnered headlines in July, when it was the first rating agency to downgrade the nation's once sterling credit rating. Standard & Poor's followed suit in August, while Fitch and Moody's have held pat at the top AAA rating.
Citing the nation's persistent debt woes, Egan-Joes issued a second downgrade on the nation's debt rating on April 5, lowering it to AA and giving it the lowest grade of any rater, big or small.