What was certainly a historic announcement earlier this weekend was made even more historic, thanks in part to a major error by rating’s agency S&P, which led to new turns in the aftermath of its decision to downgrade U.S. debt from AAA status for the first time ever.
Not surprisingly with an announcement of this magnitude, PR played a major role.
According to Playbook, citing “administration sources,” after hearing from the S&P on their downgrade decision last Friday afternoon, the Department of Treasury asked the agency to hold off so they could review the numbers, but according to the administration sources, “S&P said it was going ahead with the announcement because the news media were expecting it! In their view, they had promised something, and they seemed to be extremely interested in going out with it.”
However, the biggest issue for S&P is that when they first notified Treasury about the upcoming downgrade announcement, Treasury found a $2 trillion mistake in S&P’s research. According to Business Insider’s Joe Weisenthal, this caused S&P to then re-write the press release announcing the downgrade “to focus more on politics, delivering the downgrade with a re-cast rationale.”
“The magnitude of their error combined with their willingness to simply change on the spot their lead rationale in their press release once the error was pointed out was breathtaking,” said Gene Sperling, director of the National Economic Council, in a statement released Saturday. In response to the mounting criticism, S&P held a “rare” conference call with media yesterday, featuring the agency’s president, Deven Sharma.
At least one “clarification” press release from the S&P can be found on their website. And this story isn’t going anywhere. As TVNewser reports, CNN, Fox Business and Bloomberg Television are all airing specials tonight in advance of the U.S. markets reopening tomorrow morning.