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Summary The US government has accused ratings agency of a $2 trillion error when it downgraded America
Regulators are examining the models used by Standard & Poors after the US government accused the ratings agency of a $2 trillion (£1.2 trillion) error when it downgraded America.The inquiry is reported to be part of a broader look at McGraw-Hill, S&Ps parent company, by the Securities and Exchange Commission. S&Ps decision to strip the US of its AAA rating late on the evening of August 5 prompted a furious exchange between the US Treasury and the agency. The Treasury, which had been sent S&Ps press release on the afternoon of the 5th before it was due to be released later that day, accused analysts at S&P of a basic math error that led to the downgrade. S&P said that the $2 trillion difference in future projections for the deficit was because it and the Treasury were using figures from the Congressional Budget Office to calculate the trajectory for the shortfall over different time frames. The agency eventually went ahead and cut the US long-term credit rating to AA for the first time in its history. Moodys and Fitch, the rival rating agencies, have kept it at AAA.
