Credits S&P for Important First Step;
Challenge to Moody's and Fitch to Downgrade U.S. Debt
JUPITER, Florida (August 8, 2011) — Weiss Ratings, the
nation’s leading independent rating agency of U.S. financial
institutions, credits Standard & Poor’s for taking an important
first step in the right direction, while renewing its public challenge to
Moody’s and Fitch to downgrade the long-term debt of the U.S.
The Weiss Ratings Challenge, reissued today, was initially made to
all three credit rating agencies on May 10, 2010, or 15 months before
S&P announced its downgrade of U.S. debt from AAA to AA+ last Friday.
Weiss Ratings president Dr. Martin D. Weiss commented: “S&P
deserves credit for breaking with nearly a century of precedent and
focusing the world’s attention on the urgency of this problem.
However, we do not believe a one-notch downgrade adequately reflects the
rapid deterioration of the nation’s finances since the debt crisis
Although a downgrade can have negative short-term repercussions,
Weiss believes the consequences of procrastination can be far more
serious, while an honest rating can be constructive for the country in
the long term. Addressing the major credit rating agencies, he wrote:
“To the degree that you continue to reaffirm stellar ratings for
U.S. debt, you help entice millions of hard-working citizens, retirees,
and their intermediaries to pour more money into a potential debt trap;
or at best, to be severely underpaid for the actual risks they are
taking. You give policymakers a green light to perpetuate their fiscal
follies, further degrading our government's ability to meet future
obligations. And you help create a false sense of security overall —
the recipe for a possible meltdown in the market for U.S. sovereign
On April 28, 2011, 15 months after issuing its initial challenge to
the major ratings agencies, Weiss Ratings introduced the Weiss Sovereign Debt Ratings, giving the United States a grade of
C, and subsequently, with its release
of July 15, 2011, Weiss Ratings downgraded U.S. debt to C-
(approximately equivalent to a BBB- at S&P).
Weiss Ratings senior financial analyst Gavin Magor commented:
“The U.S. is facing some of its greatest financial challenges of
modern times, while global investors continue to take very substantial
risks when buying medium- and long-term U.S. government securities. These
include the risks of currency devaluation, reduced bond market
liquidity, bond price declines, and rapidly escalating costs of insuring
against a possible future default.”
Today, Weiss Ratings reaffirmed its C- rating of U.S. medium- and
long-term debt. Among the 49 sovereign nations covered, the United States
continues to score very low in terms of its debt burdens, macro-economic
trends, and international stability, while still getting a relatively
high grade for the broad acceptance and marketability of its debt
About Weiss Ratings
Weiss Ratings is the nation’s leading independent provider of
bank, credit union and insurance company financial strength ratings,
accepting no payments for its ratings from rated institutions. Weiss
Ratings also provides debt ratings on 49 sovereign nations.
By adhering to its independent business model, Weiss outperformed
Standard and Poor’s, Moody’s, A.M. Best and Duff & Phelps
(now Fitch) in warning of future life and health insurance company
failures, according to a 1994 study by the U.S.
Government Accountability Office (GAO). Similarly, Weiss was the only
one to identify, in advance, nearly all major banks that failed or
required a federal bailout in the 2008 debt crisis.
Weiss Ratings, LLC
Jupiter, FL 33478-6400