Geithner: S&P Showed ‘Terrible Judgement’ in Cutting US Credit Rating

Posted August 7th, 2011 at 7:50 pm (UTC-5)
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U.S. Treasury Secretary Timothy Geithner says the Standard & Poor’s credit rating agency used “terrible judgment” when it downgraded the U.S. rating last week.

Geithner tells CNBC television that the S&P showed a “stunning lack of knowledge” about the mathematics used to draw up a federal budget.

All eyes are now on global markets to see how they will react to the S&P decision to knock the U.S. rating down one notch from the top grade of triple-A.

The downgrade signals that the S&P believes U.S. government bonds are now a riskier investment. S&P Managing Director John Chambers says there is a one-in-three chance the U.S. credit rating will be dropped again as soon as six months from now.

The other two major credit rating agencies — Moody’s and Fitch — have so far kept the U.S. triple-A rating.

Earlier Sunday, the Treasury Department said Geithner will not resign. He had been considering leaving the job when the debt ceiling debate ended.

Treasury said Sunday Geithner looks forward to the important work ahead on the challenges that face the country. A White House spokesman says President Barack Obama is pleased Geithner will remain at his post.

Republican Senator Rand Paul and Congresswoman Michelle Bachmann — a Republican presidential candidate — have both publicly demanded Geithner quit, holding him and the Obama administration responsible for the lowered credit rating.

S&P officials defended their decision to drop the credit rating. They blame Congress for months of political haggling over a deficit reduction deal that S&P says does not go far enough. The deal calls for cutting the deficit by more than $2 trillion over 10 years. S&P called for $4 trillion in savings.

This is the first time since 1917 that U.S. debt has lost its top rating.