So Standard & Poor’s Maybe Can’t Do Basic Math, So What?

Off by $2 trillion? NBD.

A mathematical error discovered late Friday by Treasury Department officials threw into limbo, at least temporarily, plans by ratings firm Standard & Poor’s to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said. The wild back and forth between the Treasury Department and S&P Friday afternoon illustrated the dramatic stakes as the ratings firm moved to downgrade the debt.

S&P officials still had not decided how to proceed and could move forward with a downgrade despite the issues raised by the White House, the people familiar with the matter said. A decision could come later Friday. S&P officials notified the Treasury Department early Friday afternoon it was planning to downgrade the debt, a government official said, and the firm presented its report to the White House. S&P has previously warned such a downgrade might come if Washington didn’t move to comprehensively tackle its long-term fiscal woes.

After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes. S&P officials later called administration officials back to say they agreed about the mistakes, though they didn’t say whether it would affect the rating. White House officials remained waiting Friday evening to see what the company would do.

Math Error Fuels Fight Over Rating [WSJ]

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105 Responses to “So Standard & Poor’s Maybe Can’t Do Basic Math, So What?”

  1. Guest says:

    I'd still work for S&P than UBS

  2. so f*cked says:

    Change. Now I get it.

  3. Give Me Druries! says:

    AA is the new killing it.

  4. Guest says:

    70 years and 12 Presidents(both Democrat and Republican)………AAA.
    2 1/2 years of Obama's wild spending………………Downgrade.
    Everyone repeat after me:
    Thank You, Comrade Obama!!!

  5. Gay Fin Jock says:

    Bess you should run for Treasury Secretary. I'm sure you'll find $3 trillion error instead of $2.

  6. Backdoor_Bess says:

    Looks right to us……..

    ~ SEC

  7. dumb credit guy says:

    This is beyond irresponsible. IMO the mortgage issue was caused by these rating agencies selling ratings.
    At least in the short term we are fucked!

  8. CAPM is fucked says:

    Using the Liechtenstein 30-yr AAA notes as the risk-free rate in finance is the NKI

  9. AIG Quant (Ex UBS) says:

    What's the big deal really? This is actually going to revive the housing market., AIG, BofA, Citi etc. The only AAAs left will be RMBS senior tranches. Who's long RMBS? Boom. Done.

  10. redman says:

    just shows you can't trust an injun (dot not feather).

  11. Guest says:

    "we've made ratings decisions using worse math"

    -S&P Official

  12. Top Tier says:

    Evidently it was not a mathematical error, instead they were using the wrong baseline assumption. Sounds like an associate fucked up

    -Top Tier

  13. UFO says:

    Uhm, people still pay attention to S&P? Who the fuck cares what they have to say either way on the issue? It's not like they missed any important details in the course of the last decade…..

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