- Reuters reported that Fitch had taken the January 6, 2011 riots into consideration when determining its decision to cut the US’s rating.
- The outlet quoted a senior director as saying that the insurrection was used to demonstrate political polarization.
- The ratings agency announced an unexpected downgrade on Tuesday, which rattled stocks.
Fitch factored in the January 6 riots when it made its shocking move. Credit score of the US is slashedTuesday according to Reuters.
Richard Francis, senior Director at the agency’s ratings division, told the outlet the agency used the pro Trump insurrection to illustrate the declining standards of governance within the US.
He said, “It’s just one example of the many that reflect the decline in governance.”
Francis said, “You’ve got the debt ceiling and you have January 6.” “If you look at both parties’ polarization, it is clear that the Democrats have moved further left and Republicans farther right. So the middle has basically fallen apart.”
Fitch reduced the US credit rating, which was previously AAA, to AA+ on Tuesday night, citing a “steady deterioration of standards of governance in the last 20-year period, including fiscal and debt issues”.
Two months ago, US Vice President Joe Biden and House Republicans met in Washington. 11 th hour agreementAfter months of gridlock in Washington, the suspension of the borrowing limit for the federal government until January 2025 prevented a catastrophic default.
Fitch’s surprise announcement roiled markets and fueled a sharp drop in stocksThe Seeing of the S&P 500Slip 1% is the Nasdaq CompositeDrop over 2% in the marketplace Dow Jones Industrial AverageOn Wednesday, the Dow Jones fell by just over 350 points.
Biden administration officials immediately reacted to Fitch’s downgrade. Treasury Secretary Janet Yellen described it as “arbitrary and based upon outdated data”.
Fitch is the 2nd of the “Big Three’ rating agencies to lower the US credit score.
S&P Global made a similar move in 2011, using political polarization as one justification for its decision.
