,S&P Downgrades Fannie and Freddie Credit Ratings

[R.Zaragoza]

,S&P Downgrades Fannie and Freddie Credit Ratings the credit ratings of Fannie Mae and Freddie Mac and other agencies linked to long-term U.S. debt.

The agency also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.

All the downgrades were from AAA to AA+. S&P says the agencies and banks all have debt that is exposed to economic volatility and a further downgrade of long-term U.S. debt. Their creditworthiness hinges on the U.S. government's ability to pay its own creditors.

Stocks plunged further after the downgrades. The Dow Jones industrial average fell nearly 300 points, or 3.2 percent. The S&P 500 stock index tumbled nearly 5 percent. Investors seeking safety drove gold prices up and Treasury yields down.

Monday's downgrades of the mortgage giants Fannie and Freddie reflected their "direct reliance" on the U.S. government, S&P said.

Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. As part of a nationalized system, they account for nearly all new mortgage loans. Their downgrade might force anyone looking to buy a home to pay higher mortgage rates.

Officials at Standard & Poor's say they will also indicate shortly how local and state governments will be affected by their decision on Friday to lower the long-term U.S. debt from AAA to AA+.
S&P on Friday said that it was downgrading U.S. debt for the first time in history because it lacks confidence that political leaders will make the choices needed to avert a long-term fiscal crisis.

The downgrade of long-term debt issued by the U.S. government affects the banking and lending industries because many interest rates are pegged to the yields on Treasury securities. In addition, many companies use the securities as collateral that they would surrender if their bets lost value.

The lower credit rating for long-term U.S. debt means that it might be considered less valuable for those purposes. It might become more costly for companies to borrow or trade.

Ten of the country's 12 Federal Home Loan Banks also were downgraded from AAA to AA+.

The banks of Chicago and Seattle had already been downgraded earlier to AA+.

A spokesman for Freddie Mac declined to comment on the move.

Read more: S&P Downgrades Fannie and Freddie Credit Ratings, Other Agencies Tied to U.S. Debt - FoxNews.com

[Peter Pan]

Those two agencies are sucking taxpayers dry, time to close there doors

[ChasC5]

Originally Posted by Peter Pan

Those two agencies are sucking taxpayers dry, time to close there doors

Sure close the Bar Gates ... and turn out the lights and shut off the heat.

There's no Horses or Chickens ... Just Fat Foxes.

Enjoy.

[sanchez]

Originally Posted by Peter Pan

Those two agencies are sucking taxpayers dry, time to close there doors

Wonder how the comander in community organizer will try to pin this on the tea party? I hear they also kidnapped the linbergh baby.