Credit rating agency Standard & Poores has said that the United States will not be getting their AAA rating back anytime soon.
It was during Friday that the agency downgraded the US from the top rating of AAA for the first time in history.
Major institutions also lose their top rating
Ratings were dropped for clearing houses and other institutions which are linked to the long- term US debt to AA+ from the highest rating of AAA. Mortgage giants Fannie Mae and Freddie Mac were also downgraded due to the fact that they are directly reliant on the United States government.
Standard & Poores have been accused of coming to the wrong conclusion. Timothy Geithner, the US Treasury Secretary said: “I think S&P has shown really terrible judgement and they’ve handled themselves very poorly, and they’ve shown a stunning lack of knowledge about basic US fiscal math.”
David Beers, S&P’s head of sovereign ratings said: “We still think that the risks to the rating are still pitched to the downside – that’s why we have a negative outlook. We don’t anticipate a scenario at the moment in which the US would quickly return to AAA.”
Officials with the ratings agency have said that the earliest a sovereign has ever returned back to the highest AAA rating was 9 years, this was not the news the United States was after.
Obama administration furious
The decision by S&P has been met with anger and disbelief by the Obama administration. But S&P have defended their decision by saying that the political system of the United States is becoming less stable and the budget cut announced last week did not go far enough to alter the minds of the ratings agency.
S&P have said that major European economies have a brighter debt outlook than the US. Beers said during the call that the debt burden of the United States will continue to increase over the medium term while the burden of the UK and France is expected to reach its maximum in the next few years and then reduce.