Submitted by Fox First at Ten on September 14th
NEW YORK (AP) - Egan-Jones, an independent credit-research firm, downgraded its rating on U.S. government debt to AA- from AA on Friday, citing the Federal Reserve's plans to try to stimulate the economy.
The credit rating agency said the Fed's plans to buy mortgage bonds will likely hurt the economy more than help it.
The plan will weaken the value of the dollar and push up prices for oil and other commodities, Egan-Jones said. That would leave less for consumers to spend on other things.
But at the same time, Egan-Jones warned that the federal government's borrowing costs are likely to slowly rise as the global economy recovers.
On Thursday, the Fed said it would buy $40 billion of mortgage bonds a month to help the economic recovery.
It's the second time the Haverford, Pa. shop has downgraded U.S. government debt in five months. In April, Egan-Jones lowered its rating on the U.S. to AA from AA+. It stripped the U.S. of a top AAA rating in July 2011.
Sean Egan, the company's founder, has long railed against the power of the three major rating agencies, Moody's Investors Service, Standard & Poor's and Fitch Ratings. Egan-Jones Rating Co. is one of 10 firms the Securities and Exchange Commission recognizes as a rating organization.
Earlier this week, Moody's said it would likely lower its "Aaa" rating on U.S. government debt if budget negotiations fail.
Standard & Poor's stripped the government of its "AAA" rating on its bonds in August 2011. Fitch Ratings issued a warning of a potential downgrade.
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