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GREENWICH, Conn. Greenwich resident and Standard & Poor's president Deven Sharma played a key role in the decision to lower the countrys credit rating Friday night, according to the Associated Press. The move came just days after Congress reached a deal to reduce the countrys debt by cutting more than $2 trillion in spending.
The agency lowered the countrys AAA credit rating to AA-plus, a reflection of the opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the governments medium-term debt dynamics, according to a release.
We could lower the long-term rating to AA within the next two years if we see that less reduction in spending than agreed to, higher interest rates or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case, said the release.
Analysts have speculated the downgrade will likely cause mortgage rates to rise, an increase in debt service payments, a drop in Gross National Product and lost jobs, in addition to negative reactions in the stock market.
In recent years, Sharma has made donations to Democratic campaigns, including $2,000 to Rep. Jim Himes (D-4th District) in 2010.
Sharma testified on Capitol Hill on July 27 before a subcommittee of the House Financial Services Committee and emphasized that the independence of the credit rating agencies, including S&P, is crucial to the work they do.
Sharma told the subcommittee, In a global economy where we rate more than 120 sovereign governments, it is particularly important that rating methodologies not become subject to influence by one or more countries.
How do you think the credit rating reduction will affect you? Comment below or email ahelhoski@thedailygreenwich.com.
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