WASHINGTON – NCUA and banking regulators announced Friday the afternoon’s downgrade of U.S. credit ratings by Standard & Poor’s will not affect the risk-weighting of U.S. Treasuries owned by credit unions and banks.
The joint regulators’ statement came after S&P downgraded the U.S. government’s credit rating from the highest level for the first time in the nation’s history, saying last week’s deal to cut spending ‘‘falls short’’ of what is needed to stabilize the government’s longer-term finances.
U.S. debt now will carry an AA-plus rating instead of the coveted AAA, meaning borrowing costs could rise. The higher interest rates the U.S. Treasury would need for its bonds could spill over into other areas, such as mortgages and credit cards.
For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies and government sponsored entities will not change, the regulators said in a joint statement.
The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board’s Regulation W, also will be unaffected, the agencies said.
