The Senate Banking Committee is looking into Standard & Poor’s downgrade of U.S. debt, a committee aide said Tuesday. The committee is gathering information on the rating agency’s action, the aide added.

Separately, Rep. Dennis Kucinich, D-Ohio, sent an Aug. 9 letter to Harold McGraw 3d, chairman and chief executive of S&P’s parent, the McGraw-Hill Cos., demanding documentation of the company’s investments, to show there was no conflict of interest spawned by the rating agency’s downgrade.

Kucinich warned that the downgrade had “the potential to affect the price of [Treasuries or funds holding Treasuries] and, consequently, the value of McGraw-Hill’s investment portfolio.”

He said if he doesn’t get the documents he will launch “a thorough investigation.”

Senate Banking Committee chairman Sen. Tim Johnson, D-S.D., railed against the rating agency’s downgrade of U.S. debt to 'AA'-plus from 'AAA' on Monday, saying it was “irresponsible” and does not reflect reality.

“In the minds of serious, reasonable, and informed individuals, there is no doubt that the U.S. will meet its debt obligations and we are seeing even more proof of that today. As the financial markets stumble, investors continue to regard Treasury debt as a safe haven in times of economic uncertainty,” he said.

Johnson pointed out that the downgrade will have “spillover effects that tax the American people by increasing interest rates on home loans, credit cards, and car loans, and by increasing the cost of finance for some state and local governments.”

Suggesting the rating agency’s action was not in line with typical rating actions, Johnson said, “I am deeply disappointed in Standard & Poor’s decision to enter into the game of political punditry.”

The downgrade of U.S. debt has had a domino effect and has led Standard & Poor’s to downgrade or put on negative credit watch 1,293 housing bond issues. Of that amount, 1,067 were downgraded and 226 were put on negative credit watch, a rating agency spokesman said. In addition, Standard & Poor’s downgraded 2,829 pre-refunded bond issues, city and county investment or general pools, and bonds backed by federal leases.

The National League of Cities (NLC) issued a release on Tuesday pointing out that most municipal debt issued by general-purpose local and state governments remains highly rated and secure, despite the Standard & Poor’s downgrade of U.S. debt and successive downgrades of a number of muni conduit issues.

“Concern about the municipal market is now being driven by lack of confidence in the economy and the rating agencies’ assessments that federal policy responses have been inadequate — not local leaders failing to pay their debts or balance their budgets,” the NLC said. “To be sure, state and local governments continue to confront declining or slow growth in revenues as a result of the Great Recession and 2011-2012 will present many general purpose governments with difficult choices. But the overwhelming majority of local and state governments are continuing to balance their budgets and meet their debt obligations.”

In his letter to McGraw, Kucinich said: “I am concerned that [the credit downgrade of U.S. debt], which stands in sharp contrast to the actions of [Moody’s Investors Service] and [Fitch Ratings], may have been influenced by the financial concerns of McGraw-Hill. Your company publicly asserts that it has constructed a 'firewall’ between itself and its Standard & Poor’s subsidiary. I want to make certain that such a firewall exists and that it is working efficiently.”

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