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Entries in S&P (4)

Monday
Aug082011

Obama: 'We've Always Been, Always Will Be Triple-A Country'

ABC News(WASHINGTON) -- President Obama expressed confidence in U.S. government finances Monday, following a first-ever downgrade of the country's AAA credit rating by Standard & Poor's, and said he sensed a new urgency for a bipartisan debt-reduction deal later this year.

"No matter what some agency may say," Obama said trying to minimalize the sting of S&P's historic action, "we've always been and always will be a triple-A country."

But the president's remarks, his first since the downgrade, did little to calm volatile stock markets which began tumbling from Monday's opening bell. As Obama spoke, the Dow Jones Industrial Average free-fell past the 11,000 mark, down more than 600 points.

The president attributed the market upheaval to a "string of economic disruptions" around the world, and the debt ceiling debate brinksmanship that raised the specter of a U.S. default.

"All of this is a legitimate source of concern," he said. "But here's the good news: Our problems are eminently solvable, and we know what we have to do to solve them. With respect to debt, our problem is not confidence in our credit. The markets continue to reaffirm our credit as among the world's safest. Our challenge is the need to tackle our deficits over the long term."

Obama said he hoped the unprecedented downgrade of U.S. debt -- for right or for wrong -- would instill a "renewed sense of urgency" in Republican and Democratic leaders who are tasked with reaching a $1.5 trillion deficit reduction plan before the end of the year.

Copyright 2011 ABC News Radio

Saturday
Aug062011

White House Response to Downgrading: Debt Deal 'Took Too Long'

Jupiterimages/Thinkstock(WASHINGTON) -- The White House says Washington "must do better" in tackling the deficit.

In reaction to Friday night's downgrading of the long-term U.S. debt by Standard & Poor's, White House spokesman Jay Carney said the deal to raise the nation's borrowing limit "took too long," and the negotiations were "at times too divisive."

Republican House Speaker John Boehner took the downgrading as proof that the GOP is right in pushing for severe spending cuts.

Copyright 2011 ABC News Radio

Wednesday
Apr202011

Obama Administration Asked S&P to Hold Off on New Debt Rating 

Jupiterimages/Thinkstock(WASHINGTON) -- For months, as officials from the ratings agency Standard & Poor's sought information from the Obama administration, Treasury officials -- the ones in charge of selling U.S. debt -- worried that the ratings agency would downgrade its long-term outlook on the United States debt. They went so far as to ask S&P to hold off until President Obama was able to offer a serious proposal to reduce the debt, sources told ABC News.
 
John Chambers, a managing director at Standard & Poor's, tells ABC News that the ratings agency had looked to see how serious the U.S. government was about its debt by primarily focusing on President Obama’s Fiscal Commission report, which was published in December 2011, and President Obama’s FY2012 budget.
 
“The Fiscal Commission report was robust,” Chambers said, “but it was not warmly embraced by the executive or legislative branches of the government.”
 
President Obama put forward his FY2012 budget in February, proposing $1 trillion in deficit reduction over the next decade, which Chambers said the S&P committee found “disappointing.”
 
Three weeks ago, Rep. Paul Ryan, R-Wisc., pledged more than four times that amount -- $4.4 trillion in deficit reduction over 10 years.
 
S&P officials thought these two points of view seemed unbridgeable and prepared to change the long-term rating of U.S. debt from “stable” to “negative.”
 
Obama administration officials asked S&P to hold off on issuing its report until after President Obama and Congress had completed negotiating over the rest of the FY2011 budget, after which the president was planning to make a more serious deficit reduction proposal -- $4 trillion over 12 years -- than had been in his original proposal. Administration officials hoped that would convince the S&P officials that a compromise with Republicans was possible.
 
But while they waited for this presentation from the president, S&P officials saw President Obama and Congress locked in an intense budget negotiation over a relatively paltry $38.5 billion in spending cuts -- one that threatened to shut down the government and only averted at the 11th hour. This “dismayed” S&P officials, sources close to the process said.
 
S&P officials waited until President Obama gave his speech, which Republicans criticized as overly partisan and harsh in tone.
 
“The good news is part of the Republican leadership and the administration have put forward plans with similar fiscal targets,” Chambers said. “However when you look at the content of the proposals and the initial starting positions of this debate they’re pretty far apart.”
 
On Monday, the agency issued its report. The long-term rating would now be negative.
 
"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said in a statement.
 
S&P, notably, does not take a position on how the deficit problem be solved -- on that the agency is agnostic, having praised Germany and the U.K. for their governments’ approaches, which include tax increases.

Copyright 2011 ABC News Radio

Tuesday
Apr192011

S&P's Credibility Under Fire Amid US Debt Warning

Standard & Poor's Financial Services(WASHINGTON) -- Standard & Poor's sent shockwaves through Wall Street and Washington when it lowered its outlook on U.S. federal debt to "negative," but the credit-rating agency's own credibility has recently been called into question.

In fact, just last week a Senate investigations subcommittee ripped Standard & Poor's in a comprehensive report on the financial meltdown. The bipartisan report -- issued by Sen. Carl Levin, D-Mich., and Sen. Tom Coburn, R-Okla. -- in part blamed S&P for the crisis, saying the agency had inflated ratings on mortgage-backed securities for their own profit, only to later downgrade those ratings, destroying the value of the securities and contributing to the crisis.

In short, the senators say, "Inaccurate AAA credit ratings introduced risk into the U.S. financial system and constituted a key cause of the financial crisis."

The credibility of S&P is especially significant in the wake of the rating agency's statement on Monday that it was starting to lose faith in the government's creditworthiness. While S&P maintained its best-possible AAA rating for US federal debt, the firm lowered its outlook from "stable" to "negative." The statement means the agency now thinks there is a one-in-three chance that it will reduce the rating of the bonds in the next few years.

The S&P report quickly reverberated from Wall Street to Washington. On Monday major market indicators recorded their biggest one-day drop in more than a month. In Washington -- where a debate is raging on whether to raise the country's debt ceiling -- lawmakers pounced on the report for partisan gains.

The inability of Congress to rein in the nation's soaring deficits in recent years was at the heart of S&P's concerns. However, the agency did applaud new efforts from both sides of the aisle to tackle the country's long-term fiscal problems.

Copyright 2011 ABC News Radio







ABC News Radio