As Wall Street tanks, S&P's downgrade reverberations abound, our S&P labeled dysfunctional government, legislators are fighting back. Beyond the mealy mouthed put downs coming from the administration, the Senate Banking Committee is doing something a little more serious. The Senate panel is now probing S&P for possible violations:
The U.S. Senate Banking Committee is looking into the decision by Standard & Poor’s to downgrade the nation’s credit rating for the first time in history, according a committee aide briefed on the matter.
Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, is gathering more information on the Aug. 5 decision, which has been criticized by Treasury Secretary Timothy F. Geithner and other officials in President Barack Obama’s administration, according to the aide, who declined to be identified because he wasn’t authorized to discuss the matter publicly.
Moody's keeps the United States AAA credit rating but gives a negative outlook.
From their press release:
Moody's Investors Service has confirmed the Aaa government bond rating of the United States following the raising of the statutory debt limit on August 2. The rating outlook is now negative.
Moody's placed the rating on review for possible downgrade on July 13 due to the small but rising probability of a default on the government's debt obligations because of a failure to increase the debt limit. The initial increase of the debt limit by $900 billion and the commitment to raise it by a further $1.2-1.5 trillion by yearend have virtually eliminated the risk of such a default, prompting the confirmation of the rating at Aaa.
In confirming the Aaa rating, Moody's also recognized that today's agreement is a first step toward achieving the long-term fiscal consolidation needed to maintain the US government debt metrics within Aaa parameters over the long run. The legislation calls for $917 billion in specific spending cuts over the next decade and established a congressional committee charged with making recommendations for achieving a further $1.5 trillion in deficit reduction over the same time period. In the absence of the committee reaching an agreement, automatic spending cuts of $1.2 trillion would become effective.
Moody's Investors Service has placed the Aaa bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody's had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit.
In conjunction with this action, Moody's has placed on review for possible downgrade the Aaa ratings of financial institutions directly linked to the US government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks. We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the US government or the affected financial institutions.
The triple-A rating on U.S. government bonds is one of the main reasons why many investors, including other major central banks, hold these dollar assets.
Take this top-level rating away and many will be forced to sell. The diversification flows into other major currencies, which have been a major source of dollar weakness in recent years, will only accelerate.
"(They said) 'We don't care, we have to get a credit score and without that credit score, we can't make the loan and we can't get a credit score because you're deceased. Now we know you're not deceased, but they think you are. So we're not going to do this loan,'" Kerr said.
Tis a problem? Hey, we don't care that you're not dead and have a credit score of 800, Experian says you are dead so we're going to deny you a loan!
Think these credit scoring agencies have just a little too much power?
Howe's Experian credit report had her listed as deceased. One of her creditors had reported her as dead.
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