Standard and Poor’s has a bad track record in rating securities. Sometimes they even screw up on basic math, as they did with their $2 trillion error in downgrading US debt. They apparently don’t want anyone to know about that.

Standard & Poor’s, whose unprecedented downgrade of U.S. debt triggered a worldwide stocks sell-off, is pushing back against a U.S. government proposal that would require credit raters to disclose “significant errors” in how they calculate their ratings.

S&P, which was accused by the Obama administration of making an error in its calculations leading to Friday’s downgrade, raised concern about the proposed new corrections policy and other issues in an 84-page letter to the Securities and Exchange Commission, dated August 8.

The SEC is weighing sweeping new rules designed to improve the quality of ratings after their poor performance in the financial crisis.

The 517-page proposal includes a requirement that ratings agencies post on their websites when a “significant error” is identified in their methodology for a credit rating action.

The timeline here is kind of brilliant. The SEC posts its rating agency rules. In the midst of this, S&P downgrades the US, making a huge math error in the process. One of the SEC rules is that math errors and others like it must be disclosed. Then S&P writes to the SEC, asking them to get rid of that rule.

Open Secrets estimates that the rating agencies have spent over $1 million lobbying for changes to the relatively weak rating agency regulations in Dodd-Frank. As Jeffrey Manns writes, it’s hard not to see the downgrade as part of that process:

The credit rating agencies are taking advantage of the country’s financial problems to increase their own political power. They want to ensure that regulators do not reduce their autonomy and influence.

Their strategy is brilliant. They are not piling on all at once by downgrading the United States in concert. Standard & Poor’s is the bad cop for now, taking the first swipe at the United States last Friday, and seeing its influence confirmed by the stock market’s dramatic reaction. Moody’s and Fitch are playing the good cop — exercising restraint about a potential downgrade, yet still flexing their muscles by criticizing the government both publicly and behind the scenes.

The rating agencies have the federal government over a barrel. If politicians ignore rating agencies’ warnings, they risk a withering assault of additional downgrades that could undercut confidence in the government and inflict soaring interest rates. The good-cop, bad-cop routine is especially potent because a downgrade by two of the three major rating agencies could lead to negative consequences, such as requiring some bond issuers to secure additional collateral.

Remember that there is a pending SEC study in Dodd-Frank to design an independent organization that would select the securities the agencies would rate, abandoning the issuer-pays model (this is Al Franken’s amendment). There was also a part of the law that would have allowed investors to sue rating agencies for inaccurate ratings. The study has so far not been conducted, and the civil liability rule abandoned.

The Senate Banking Committee claims to be gathering information on S&P, but as Manns says this is an industry-wide phenomenon. Long ago, the government gave the rating agencies a good deal of power, and now they’re using it to protect their core business. I’d love to see Congress defy the rating agencies and reduce their role in bond deals (through mandating AAA securities in them), but I don’t see it happening.

But if the notion that S&P leaked the rating information early, which Charlie Gasparino has now picked up, gains traction, then all bets are off.