Los Angeles fires Standard & Poor's from rating its $7 billion investments

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

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

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

Ongele says cancelling the contract will save the city $16,000 a year.

The news comes after the Justice Department began an investigation into whether Standard & Poor's improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to a newspaper report.

It claims that the investigation began before Standard & Poor's cut the United States' AAA credit rating this month, but it's likely to add to the political firestorm created by the downgrade.

Some government officials have since questioned the agency's secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations, according to The New York Times.