S&P's defends its record against US govt attacks
Hitting back at the Obama administration which loudly questioned its unprecedented downgrade of US' credit rating, Standard & Poor's today defended its excellent track record and said the move was necessitated by America's growing debt burden.world Updated: Aug 08, 2011 12:35 IST
Hitting back at the Obama administration which loudly questioned its unprecedented downgrade of US' credit rating, Standard & Poor's on Sunday defended its excellent track record and said the move was necessitated by America's growing debt burden.
S&P's David Beers said the world's largest economy continues to be at a "downside" risk and the criticism of the agency was largely a "misrepresentation of facts".
The credit rating agency had on Friday downgraded US' rating of creditworthiness from the top AAA rating to AA+, sending shockwaves across the world and inviting criticism from the White House.
Defending the agency against accusations of overstating what America's debt burden would be, Beers said S&P's track record was very robust.
"Well, that's completely untrue. And as a matter of fact, the group that rate, the one that rates government ratings has an excellent track record in terms of what ratings are designed to do, which is to provide a meaningful indicator of credit risk," Beers said.
"So, as far as the track record of our ratings are concerned, we think they are very robust. Other people think they are robust, too. And we think that will continue to be the case," he said when asked to respond to the attacks on Fox news.
Asked to respond to criticism from the White House, which accused S&P of amateurism and a $ 2 trillion overstatement of what the debt would be, he termed it a misrepresentation of facts.
"That's a complete misrepresentation of what happened. And here, we're talking about highly technical assumptions about projecting budget base lines far into the future.
"And when we made the modifications that we did after a conversation with the treasury, it doesn't change the fact that in our estimation, that even with the agreement of Congress and the administration this past week, that the underlying debt burden of the US government is rising and will continue to rise most likely over the next decade," he said.
Beers stated again that the agency holds a negative outlook on the rating for the US, which means "the risks currently or the rating are to the downside".
Noting that in the US, Congress and the administration are jointly responsible for the conduct of fiscal policy, Beers said the last minute agreement on avoiding a debt default shows how different sides were finding it difficult to arrive at a consensus on fiscal policy measures to be adopted.
"It's about the difficulty of all sides in finding, you know, a consensus around fiscal policy choices, now and in the future," he said.