U.S. Put On Review For Possible Credit Rating Downgrade By Moody's

Because of the "rising possibility" that Congress will not soon approve a deal to raise the debt limit, Moody's Investors Service has reportedly put the U.S. on review for a possible credit rating downgrade, according to Bloomberg.

From the Moody's statement:

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.

From Reuters:

NEW YORK (Walter Brandimarte and Daniel Bases) - The United States may lose its top-notch credit rating in the next few weeks if lawmakers fail to increase the country's debt ceiling, forcing the government to miss debt payments, Moody's Investors Service warned on Wednesday.

Moody's was the first among the big-three rating agencies to place the United States' Aaa rating on review for a possible downgrade, which means a negative rating action is impending.

In a statement, Moody's said it sees a "rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on U.S. Treasury debt obligations."

Check here for additional debt ceiling updates.

Comments

[smburwick]

07:50 AM on 07/15/2011

eris23skidoo:Right now you are showing that you have the attention of a knat. Hayek is too difficult for your dumbied down liberal mind.

[Christopher L Jackson]

01:08 AM on 07/15/2011

these comments are absurd. obama will have us all believe that, the sky will fall if we don't raise the debt ceiling. great idea! raise the debt ceiling and debase the currency we have left. Look, the sky won't fall. We defaulted back in the 1980's and look, seems like we are still here.

The checks will not stop. Obama says the sky will fall. this is akin to Paulson going to Congress and telling Congress that, if they didn't cough up, there would be martial law in the streets.

Everyone.. relax....

[Eris23Skidoo]

12:17 AM on 07/15/2011

If the republicans succeed in breaking our economy a second time in only five years I want them exiled. They can go live with their masters in China and Saudi Arabia.

[NYCBruce]

07:20 PM on 07/14/2011

Just saying-- it's easy for the very wealthy to say "just shut down the government". They don't have a problem with putting food on the table should an August Social Security payment not be made-- nor turned around at the door of a VA Hospital because there are no funds to pay for our veteran soldiers' and sailors' treatment anymore. If "priorities" must be set toward paying bills come August 2nd, then paying Congress should be the LAST priority. And just for the record: the November election had very little to do with the actual accomplishments of the current administration. They had EVERYTHING to do with gullible people buying into the Tea Party hogwash about "revolution", when all they represented was a repackaging of the most damning elements of the far right wing by wrapping a flag around them, and calling them "macaroni". THAT sure turned out well, don't you think???

[Eris23Skidoo]

12:18 AM on 07/15/2011

They fooled the people just long enough to have an election.

[kburgoyne]

07:10 PM on 07/14/2011

Moody's. What a joke. The same Moody's the COMPLETELY missed the MASSIVE housing bubble. The same Moody's that in 2006 berated Fannie Mae and Freddie Mac, in writing, for losing market share in the mortgage market by their being slow to get involved in "hybrid" loans and other "creative" mortgages. Why would anybody listen to financial advice from such a loser.

[pickles n pops]

11:21 PM on 07/14/2011

Yep, but "missed" should be in quotes. ;)

[Eris23Skidoo]

12:19 AM on 07/15/2011

They also rated AAA the junk bonds known as "derivatives".

[smburwick]

07:00 PM on 07/14/2011

flyover: the teleprompter rejected it.

[smburwick]

06:57 PM on 07/14/2011

sioux55: Read Road to Serfdom by Hayek. That should clear your mind.

[Eris23Skidoo]

12:20 AM on 07/15/2011

Hayek's a fool. Don't listen to anything he says.

[smburwick]

06:56 PM on 07/14/2011

sioux55: using projection and blaming the other for what your guys are doing.

[Eris23Skidoo]

12:21 AM on 07/15/2011

Why don't you reply to a person's actual comment? The rest of us have no idea what you are talking about. You're pissing in the wind.

[smburwick]

06:55 PM on 07/14/2011

re-elect Clinton? why would you want to do that. What are you talking about?

[smburwick]

06:54 PM on 07/14/2011

patrickgarret: Hertzog who resigned from his economy gang saw that they intended to double the deficit in ten years and he left. Didn't want to be a part of itl. The party of Jesus? tsk. Tsk. you atheist? demonizing again liberals.What in 14.5 trillion don't you get? They are working on it now, and I hope the numbnuts on both sides come to a decision that is right for this country. One thing this president definitely has done. He is divisive. Divide and Conquer?

[Dee Amschler]

05:37 PM on 07/14/2011

Oh goody, Moody's openly admits they're holding this country hostage and want us (or at least our "leaders") to do their personal bidding. What a traitorous lot.

[Eris23Skidoo]

12:24 AM on 07/15/2011

Actually, it's called "giving fair warning". It's Moodys' JOB to rate bonds. Do you want them to lie to investors and say that govt bonds are AAA when they're really BB?

[Dee Amschler]

04:08 PM on 07/18/2011

Doing their job is one thing. Doing their job in a way that openly tells our government it MUST do what they want it to do in order to preserve their rating is blackmail. I'd still argue they're traitors.

It would be like if the mob or any other gang of criminals said "I'll give you a loan for every penny you need (or do whatever thing you need most), but first you have to do me a "favor". Would you do that "favor"? I sure wouldn't. Moody's is trying to force the government to do what they think it should do and to do it how they think it should be done. Which is exactly what the gang of criminals is doing in my example - they see a person with a need and a weakness and they're hoping to take advantage of both.

[furby6]

03:50 PM on 07/14/2011

I guess Americans are going to have to stop making Greek jokes pretty soon...

[pickles n pops]

11:32 PM on 07/14/2011

More like a Greek tragedy. Our MSM has completely mischaracterized the problems in Greece, the rest of Europe, and around the world. Please read our HuffPo founder's thoughtful essay about the situation over there. http://www.huffingtonpost.com/arianna-huffington/postcard-from-greece-this_b_886211.html

[furby6]

09:58 AM on 07/15/2011

Thanks, good article. A side not covered in this article is just how many government employees there are and the generous and unrealistic benefits they were entitled to. People get two months off every year and huge retirement benefits. I saw an interview on BBC with the head of the civil employee union, the largest and most powerful union in Greece. Their inability to negotiate reductions in staff and benefits with the government was a major cause of the crisis. And to exacerbate the situation, tax dodging is commonplace. It's not all about democracy, it's also about pretty basic economic principles.

[evans566]

03:15 PM on 07/14/2011

Moody's was in bed with Wall Street on the great financial ripoff that triggered the Great Recession. They are the same unprofessionals who proved they would say whatever Wall Street Banksters wanted them to say. Remember, Moody's rated all those derivatives and credit default swaps as AAA investments when they were really junk, and they knew they were junk. They rated the banks AAA until right up to the crash. I wonder who is pulling their strings on this debate?

[pickles n pops]

11:35 PM on 07/14/2011

And they should be on the hook, along with the rest of the Wall Street mob, for the cost of the bailouts -- not the American working and middle classes.

[randyman99]

02:38 PM on 07/14/2011

I think perhaps Democracy is a failed experiment. It is a good idea, but I fear humanity has not yet evolved far enough to make it work well. It placates the masses, in that they get what they vote for, but what they vote for is a herd of idiots who have no sense of economics necessary to make the country run like a well-oiled machine.

For a while, we had strict banking and investment regulation. I had a economics teacher in the 70's who said we would never have another banking crisis in the U.S. like in the Great Depression, because of the regulation and oversight of the financial industry. Then along came the Savings and Loan deregulation of the Reagan years, and the following S&L crisis. Further deregulation of the financial industry since then has led to to the recent financial crisis. And it was all to line the pockets of the politicians who voted for the changes.

The answer is simple - reimpose the financial regulations we had in the 60's and 70's, updated for the new "tricks" of the financial industry. The country was doing quite well with the higher income tax rates of the 90's as well.

Getting politicians to do what is right is not so simple, as they are beholden to those who line their pockets, and the populace vote for those with the sweetest song, not those with the most intelligence and integrity to do the right thing. Alas...

[Jimmie Carey]

05:00 PM on 07/14/2011

Very good, but I think we need to get a bit harder nosed about who gets welfare (like urine tests?) - get rid of the Unions or take away their power to some extent. Take away a percentage of salary in the govt. Let them tighten their belts. Forget the two new gyms they are planning, get rid of the limosines (sp) Send a bunch of the illegal aliens in jail back to Mexico. Make congress use our ss system and health care....get them off their high horses...

[daradams]

06:44 PM on 07/14/2011

Jimmie - Excellent post FAVED

[randyman99]

07:18 PM on 07/14/2011

Give them money and they will do what you want. If you wonder why they act the way they do, follow the money.

[dadw5boys]

02:22 PM on 07/14/2011

Moody's the same one that said AIG was AAA+ when Paulson had a guy ADDING Funds to AIG's bank account daily and Lehman Brothers was AAA+ when the FBI was areresting all the Executives for Fraud !

[Eris23Skidoo]

12:28 AM on 07/15/2011

To be fair, the FBI probably didn't telephone Moodys to tell them that they were about to arrest some Lehman executives. I imagine that is sensitive information.