Heads in the sand: Debt ceiling disclosures MIA in the filings

July 14, 2011

Given the steady and increasingly louder drumbeat of news about the debt ceiling — this morning brings the news that President Obama might summon key members of Congress to Camp David, where such weighty issues as peace in the Middle East have been hammered out — and the need to increase the debt ceiling to prevent the U.S. economy from imploding, we thought it would be interesting to see what public companies are saying about this in their routine filings. After all, we’ve already seen everyone from Warren Buffett to Michael Bloomberg, not to mention top business groups sounding the alarms.

So you can imagine our surprise when we searched the filings and found — wait for it — next to nothing on an economic issue that just about everyone seems to be talking about. It was so surprising that we’ve checked multiple times, using different word strings, since we were so convinced there had to be something — a new risk factor, a warning about missing numbers — something. The most interesting recent thing we were able to turn up was a disclosure in this 8-K that SRA International (SRA) filed last month to announce some additional details related to its private equity deal. Snore city! Oddly enough, there was a bit more activity back in May, when Theo footnoted about new debt-ceiling disclosures made by Met Life (MET) and KKR & Co. (KKR).

What makes this so surprising is that there’s usually a very short lag between the time some significant news event happens and the disclosure in SEC filings. Companies don’t usually miss an opportunity to spell out a potential negative scenario, figuring it’s better to err on the side of caution than stick their heads in the sand. Our favorite remains the rush of companies who filed Katrina-related disclosures shortly after the 2005 hurricane that ravaged New Orleans and other parts of the Southern US. But we’ve also seen companies quick to warn on a wide variety of other issues from the recent nuclear crisis in Japan to the massive protests in Egypt earlier this year.

Given how closely the debt ceiling issue is tied to the economy, it seems like a very odd dichotomy. Either companies are waiting for the political posturing to play out before they start tinkering with their filings. Or, they expect the whole thing to be resolved as Professor Bainbridge hints at in this post from yesterday on market-making on the debt ceiling.

Image source: DeBugged blog

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