'No Way' U.S. Credit Gets Downgraded -Geithner
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After red flags were raised on Monday about the Aaa rating of the U.S., the Treasury Secretary Timothy Geithner came out in defense of the rating assigned to U.S. debt, saying that there is "no way" major credit agencies will downgrade the nation's status.
Moody's Investors Service released a report on Monday that stated that risks are there for Aaa nations, like the U.S., U.K. and Germany among others, to be downgraded.
Geithner defended the rating of the U.S. by saying that the Obama administration is setting up to significantly lower the national deficit over the next four to five years as a percentage of total economic output.
"What people who look at our country – credit rating agencies, investors, Americans, what they look at is whether we have the political will to restore gravity to our fiscal position," Geithner said on Tuesday when answering questions at a hearing with the U.S. House of Representatives Appropriations Committee.
The Treasury Secretary then said, "There's no way that’s going to happen," when asked if the U.S. is at risk of being downgraded after Moody's stated that the nation’s debt heightened the risk of a downgrade amid a sluggish recovery.
Moody's said on Monday that "On balance, we believe that the ratings of all large Aaa governments remain well positioned – although their ‘distance-to-downgrade’ has in all cases substantially diminished, and tail risk has widened."
The credit rating of a nation allows investors to gauge the risk of a borrower being able to repay a loan. The rating of nations like the U.S. and the U.K. being at a Aaa level, means there is little to no risk to worry about.
Moody's Investors Service released a report on Monday that stated that risks are there for Aaa nations, like the U.S., U.K. and Germany among others, to be downgraded.
Geithner defended the rating of the U.S. by saying that the Obama administration is setting up to significantly lower the national deficit over the next four to five years as a percentage of total economic output.
"What people who look at our country – credit rating agencies, investors, Americans, what they look at is whether we have the political will to restore gravity to our fiscal position," Geithner said on Tuesday when answering questions at a hearing with the U.S. House of Representatives Appropriations Committee.
The Treasury Secretary then said, "There's no way that’s going to happen," when asked if the U.S. is at risk of being downgraded after Moody's stated that the nation’s debt heightened the risk of a downgrade amid a sluggish recovery.
Moody's said on Monday that "On balance, we believe that the ratings of all large Aaa governments remain well positioned – although their ‘distance-to-downgrade’ has in all cases substantially diminished, and tail risk has widened."
The credit rating of a nation allows investors to gauge the risk of a borrower being able to repay a loan. The rating of nations like the U.S. and the U.K. being at a Aaa level, means there is little to no risk to worry about.
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