S&P Downgrades Fannie and Freddie, Too

And any other agencies linked to long-term US debt
By Newser Editors and Wire Services
Posted Aug 8, 2011 2:18 PM CDT
In this July 11, 2008 file photo, a sign in front of the Fannie Mae headquarters in Washington is seen.   (AP Photo/Manuel Balce Ceneta, File)

(Newser) – Standard & Poor's has downgrade fever. The ratings agency today downgraded the credit ratings of mortgage lenders Fannie Mae and Freddie Mac and a host of other agencies linked to long-term US debt, including farm lenders; long-term government-backed debt from 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+, reflecting the same downgrade S&P made of long-term US government debt on Friday. S&P said the agencies and banks all have debt that is exposed to economic volatility and a further downgrade of long-term US debt. Their creditworthiness hinges on the US government's ability to pay its own creditors. The downgrades helped fuel today's huge selloffs on Wall Street. Click here to read Nate Silver's take on why S&P ratings are meaningless.

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