Ratings agency Moody's Investors Service on Monday warned it might also downgrade the U.S. government'scredit rating if its planned measures to reduce its budget deficitturned out to be not "credible" after all.
In his first comments after the move by rival rating agency S&P, Moody's analyst Steven Hess sounded a note of caution about Moody's rating of the U.S., repeating that the August 2 plan to cut deficits by $2.1 trillion was positive for the U.S. credit standing, but not enough to keep its rating on a stable outlook......"If the process for further deficit reduction that is included in the budget control act produces results that are not really credible, that combined with the economic performance could potentially cause an early move on the rating," Hess told Reuters in an interview.
Standard & Poor's Ratings Services on Monday downgraded the credit ratings of Fannie Mae and Freddie Mac and other agencies linked to long-term U.S. debt.
The agency also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.
All the downgrades were from AAA to AA+, reflecting the same downgrade S&P made of long-term U.S. government debt on Friday.
"The key thing is, yes, entitlement reform is important because entitlements are the biggest component of spending, and the part of spending where the cost pressures are greatest."...the agreement last week to reduce the nation's debt by at least $2.1 trillion over the next 10 years "fell well short" of comprehensive reforms that some had advocated.