Updated (8:21pm, New York time): The US treasury gained a stay of execution but not for very long, it turned out.
The WSJ reports on Friday evening that US treasury officials found a $2,000bn error in S&P’s mathematics, amid heated discussion on Friday afternoon about the rating agency’s plan to downgrade the US sovereign.
There’s been no comment from the rating agency but it’s striking that reports suggest an error with its calculations rather than a difference in assumptions between it and the government. The repercussions of this could be major for S&P.
After two hours of analysis, Treasury officials discovered that S&P officials 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 with the mistakes, though they did not say whether it would affect their rating. White House officials remained waiting Friday evening to see what the company would do.
An S&P spokesman didn’t return repeated calls for comment
Worth treating reports with caution but CNBC adds that S&P is reconsidering its plans to downgrade the US, which it broke to the government on Friday afternoon. If the rating agency backs down after this, it would be an embarrassment, to say the least.
Friday, August 05, 2011 7:54:30 PM RTRS – S&P RECONSIDERS U.S. DOWNGRADE AFTER GOVERNMENT CHALLENGE-CNBC
Friday: five stories, five questions – FT Alphaville