S&P Warns Lawmakers on Debt

Another day, another sign that Wall Street is starting to freak out about the debt-ceiling debate. Standard and Poor’s, one of the two major U.S ratings agencies, has been privately warning lawmakers that failure to raise the debt ceiling will result in a downgrade in U.S. debt. And the agency shot down a proposal by some Republicans that the U.S. simply pay off bondholders first if it can’t raise the ceiling, saying that won’t preserve the national AAA credit rating. The private warnings come a day after Moody’s, the other major ratings house, announced it was putting America’s Aaa rating on review because of concerns of default.