Moody's: U.S.'s 'Aaa' Credit Rating Is Stable -- For Now
Moody's ratings agency said today that the U.S. government's highest-level "Aaa" credit rating is stable -- at least for the time being -- despite mounting debt related to President Obama's budget and stimulus.
This comes one week after rival ratings agency Standard & Poor's raised the specter of a U.S. downgrade after it warned England its "Aaa" rating is in jeopardy, owing to mounting debt.
Steven Hess, vice president and senior credit officer at Moody's, did not rule out a downgrade of the U.S. rating, warning that the rising debt could put "negative pressure on the rating in the future," Hess told the Associated Press.
Moody's has never rated the U.S. lower than "Aaa" since it began rating the government in 1917.
There's another element to this story: Why should anyone believe anything the big credit ratings say anymore, any way?
After all, in hearings last fall, the heads of S&P, Fitch's and Moody's admitted that they didn't fully understand the complex financial derivatives that earned top ratings, that they gave high ratings to mortgage-backed securities because they didn't see the housing crisis coming, that they considered slackening their standards to win ratings business from their rivals and that they worked with companies on how best to gain high ratings.
"I think you've lost your brand," Sen. Chris Shays (R-Conn.) told the heads of the three ratings agencies during the October hearings. "You have no credibility. You have so screwed up the ratings as to [make them] not be believable anymore."
Shays then asked each of the three: "Do you agree with that?"
"Absolutely," said S&P's Deven Sharma said. "We have to earn our credibility back."
"Our reputation has been damaged," Fitch's Stephen Joynt offered.
"I think there has been situational damage," Moody's Ray McDaniel said.
May 27, 2009; 4:01 PM ET
Categories: The Ticker | Tags: Chris Shays, Fitch, Moody's, S&P, Steven Hess
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