Business

Published — July 27, 2011 Updated — May 19, 2014 at 12:19 pm ET

Credit rating execs short on debt plan specifics for small audience at House hearing

Deven Sharma, president of credit rating firm Standard and Poor's. Lawrence Jackson/The Associated Press

S&P president says downgrade not the same as default

Introduction

With the debt ceiling debate raging in Washington, questions of whether, or when, the country’s largest credit rating agencies will downgrade the nation’s creditworthiness has become a central issue. Not so central, though, to attract more than a half-dozen congressman to a hearing where top executives from credit ratings agencies testified.

Only a handful of members were present on Wednesday at a House Financial Services oversight subcommittee hearing where Standard & Poor’s president, Deven Sharma, and Moody’s Investors Service’s global managing director, Michael Rowan, were called to discuss credit rating reforms under the year-old Wall Street reform law. That subject, however, was later abandoned by lawmakers who wanted to know the executives’ views on the debt ceiling fight underway in Congress.

Republican Scott Garrett of New Jersey asked the two ratings executives questions about debt ceiling proposals that have been circulated by each political party, but perhaps predictably, neither would commit to specifics.

Sharma said that “some of the plans” to cut the U.S. deficit could bring the nation’s debt “in the range of the threshold for AAA ratings,” but added that S&P does not comment on political decisions until they are finalized. And while the U.S. “debt burden does need to be addressed,” a drop from a AAA to AA rating doesn’t mean his analysts predict default, just that the risk is predicated to be higher, Sharma said.

Rowan reiterated that “Moody’s has placed the U.S. government under review for a possible downgrade,” an announcement his company made earlier in July.

Treasury Secretary Timothy Geithner has warned that if Congress doesn’t reach a deal soon, the U.S. Treasury will hit the debt ceiling next Tuesday and be unable to pay all its bills.

Credit rating firms have been widely criticized for contributing to the 2008 financial crisis by giving high ratings to mortgage-backed securities that later had to be sharply downgraded. Because credit raters were hired by banks, critics say the firms had an incentive to issue higher ratings.

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sam fetters
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sam fetters

What do AT&T, Verizon and Crown Castle International Corp have in common? The largest institutional shareholders of each includes firms like: Vanguard, BlackRock, State Street (the “Big Three”), Invesco, Fidelity (FMR), JP Morgan, Wellington Management, Geode, T Rowe Price, Bank of America, and other of the largest money-management and investment firms, whom operate collaboratively (even comprising the largest shareholders of each other), forming virtual monopolies amongst the largest “competing” corporations, in most every single industry, via large share holdings. (source = http://investors.morningstar.com/ownership/shareholders-major.html?t=CCI) These are the same firms whom also largely own the third largest telecom, T-Mobile. The own the largest… Read more »

Jello Beyonce
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Jello Beyonce

I’ve a theory that the supposed “Trade Wars” and “sanctions” and political/military strife going on between the U.S., China, Russia, etc. are merely distractions, serving to divert attention away from the growing authoritarianism and Oligarchic control spreading across the globe. “Nationalism” is being used as a propagandist covert means of continued increasing Globalism. As this article states: “A Russian woman stood up to speak at one of these public meetings, and she said that when she lived in Russia, the government slam dunked her and she had no say,” King said. “Now she lives in the United States of America,… Read more »

ET69
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ET69

Marx was right about capitalism . Capital gets more and more concentrated in fewer and fewer hands. There is no way out of this greed. We need socialism!

Linda Gordon
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Linda Gordon

5g is a kill grid. The depployment of this weapon is an act of terroism genocide and ecocide. The marketers need to be jailed as terrorists.