Credit rating firm Standard & Poor’s downgraded the credit rating of mortgage giants Fannie Mae and Freddie Mac on Monday, as part of a larger reassessment of U.S. debt holdings.
The downgrade — from AAA to AA+ — reflected Fannie and Freddie’s “direct reliance” on the U.S. government, S&P said. (RELATED: S&P’s Beers: No 2nd thoughts on US downgrade)
“Fannie Mae and Freddie Mac were placed into conservatorship in September 2008 and their ability to fund operations relies heavily on the U.S. government,” S&P said in a statement. “In addition to the implicit support we factor into our ratings, the U.S. Treasury has demonstrated explicit support by providing these entities with capital quarterly, as necessary.”
S&P also lowered ratings for other institutions tied to the national debt: farm lenders, long-term U.S. government-backed debt issued by 32 banks and credit unions, and three major stock and bond clearing houses. Ten of the country’s 12 Federal Home Loan Banks were also downgraded.
All the downgrades were from AAA to AA+.
S&P downgraded the overall U.S. debt for the first time in history on Friday over doubts the United States could avoid a long-term financial crisis because of political gridlock.
S&P did not return calls for comment.