Buffet gets downgraded after slamming S&P
9 Aug, 2011 17:01
After billionaire Warren Buffet had some negative words for Standard & Poor’s on Friday, the credit ratings agency got a little pessimistic themselves by offering up some bad news for Buffet’s Berkshire Hathaway.
Following S&P’s downgrade of US debt on Friday, Buffet told reporters that he didn’t quite understand why the rating necessitated a lowering from its triple-A rating. “[It] doesn’t make sense,” Buffet told Fox News on Friday night. He added that in his home base of Omaha, “the US is still triple-A.”“In fact, if there were a quadruple-A rating, I’d give the US that.”Buffet finished with another snide remarks directed towards S&P, reminding reporters that “this is the same group that downgraded Berkshire,” referencing the February 2010 decision out of Standard & Poor’s to drop Buffet’s company from triple-A to just AA-plus.Now days later, S&P is considering doing it again.On Monday, S&P downgraded Berkshire Hathaway’s outlook from “stable” to “negative.” Though his conglomerate will maintain their AA-plus rating for the time being, it signals a potential downgrade in the near future.Steve Check of Check Capital Management in Costa Mesa, California told Reuters that he doesn’t think the outlook downgrade will do much to Buffet. "I don't think it matters much to Berkshire and I don't think it makes much sense," said Check.Buffet had some more words of his own for S&P on Monday, offering up to CNBC that the downgrade of the US debt may lead him to change his own opinion on the credit raters.Berkshire holds onto around 28 million shares of Moody’s Corp., S&P’s main competitor. Also affected by S&P in the last few days were Knights of Columbus, New York Life, Northwestern Mutual, TIAA and USAA. All of those insurers were downgraded to AA-plus from their previous ratin of triple-A. In an official statement from Standard & Poor’s, they write that they will likely lower ratings on insurers again if a downgrade US debt happens once more.