Fitch official confirms that January 6 Capitol riot was partially behind its controversial US downgrade
- A top official with Fitch Ratings said January 6 influenced its controversial downgrade of US credit.
- "[I[t just is a reflection of the deterioration in governance ...," the official told Reuters.
A top official with Fitch Ratings on Wednesday confirmed reports that the agency issued its controversial downgrade of US credit due in part to the violent January 6 Capitol riot.
"It was something that we highlighted because it just is a reflection of the deterioration in governance, it's one of many," Richard Francis, a senior director at Fitch Ratings, told Reuters of the agency's conversations with the Treasury Department.
Francis' comments confirm multiple reports that Fitch officials brought up the riot with Biden administration officials before announcing their surprise downgrade on Tuesday evening. Fitch's statement does not mention January 6, but it does argue that a broader "erosion of governance" compared to other peers supported knocking US credit to an AA+ standard.
The White House, Treasury Department, and a swath of economists have criticized Fitch's decision. The downgrade mirrors S&P's historic decision to downgrade US credit after the 2011 debt ceiling fight. Congressional Republicans and the White House were once again able to avoid default in June, but Fitch said the recurrent nature of filtering with default is simply too much to bear.
"I strongly disagree with Fitch Ratings' decision," Treasury Secretary Janet Yellen said in a statement. "The change by Fitch Ratings announced today is arbitrary and based on outdated data."
Global markets sank on Wednesday as traders began to process the news. But many economists remain convinced that the larger US economy will be fine in the long run.
"The United States faces serious long-run fiscal challenges," Former Treasury Secretary Larry Summers, a noted critic of Biden's COVID stimulus, wrote on Twitter. "But the decision of a credit rating agency today, as the economy looks stronger than expected, to downgrade the United States is bizarre and inept."
The juxtaposition of Fitch's decision and January 6 became inadvertently apparent as soon as their decision was announced. News of former President Donald Trump's indictment related to his efforts to overturn the election broke just as Fitch's downgrade became public.