US Treasury Secretary Geithner Will Stay, Despite Downgrade
U.S. Treasury Secretary Timothy Geithner has told President Barack Obama that he will stay on in his position, as experts predict a negative impact on the stock market after a downgrade in the U.S. credit rating.
The Treasury Department Sunday said Geithner will remain in his post for the present, to deal with the country’s economic uncertainty.
Geithner told White House officials earlier this year that he was considering leaving the job after the debt ceiling debate concluded. In the recent gridlock over raising the debt ceiling, some Republican critics had called for him to step down.
Also Sunday, the managing director of Standard and Poor’s credit rating agency, John Chambers, said there is a one-in-three chance that the U.S. credit rating will downgrade further over the next six months to two years.
His agency downgraded the U.S. credit rating from triple-A to double-A-plus on Friday. Experts predict the move will have a negative impact on Monday’s U.S. stock market opening.
Chambers said that the credit rating will likely not improve until the national debt stabilizes and lawmakers in Washington are more willing to compromise with each other.
Former White House senior adviser David Axelrod Sunday blamed the downgrade on the Tea Party movement. He said the fault lies with lawmakers who were “willing to see the country default” rather than strike a deal on the debt ceiling.
Former Federal Reserve Chairman Alan Greenspan said he expects the U.S. stock market to react negatively to the downgrade Monday, but he added that he sees no risk in investing in U.S. Treasury bonds.
S&P officials defended their decision to drop the credit rating, blaming Congress for months of political haggling over a deficit reduction deal that S&P says does not go far enough. The deal calls for reducing the deficit by more than $2 trillion over 10 years. S&P had called for $4 trillion in savings.
The other two major credit rating agencies, Moody’s and Fitch, have so far maintained the U.S. triple-A rating. The S&P move raises questions about the impact on investors, who have long seen U.S. debt, in the form of bonds or treasuries, as one of the safest investments in the world.
This is the first time since 1917 that U.S. debt has lost its top-tier rating.