Fannie Mae, Freddie Mac May Be Cut by S&P Over U.S. Reliance

Friday, 15 Jul 2011 03:53 PM

 

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Fannie Mae and Freddie Mac may have their AAA ratings lowered by Standard & Poor’s Ratings Services because of their dependence on the U.S. government, which is under review for a possible cut.

S&P also placed select AAA-rated Federal Home Loan Banks and 126 debt issues guaranteed by the Federal Deposit Insurance Corp. on Creditwatch negative, meaning there’s a one-in-two chance they may be cut in the next 90 days, the ratings firm said today in a statement.

S&P reduced the outlook on the U.S. rating to negative from stable on April 18. The U.S. may have its AAA long-term rating lowered if S&P concludes Congress and President Barack Obama’s administration haven’t achieved a credible solution to the rising U.S. government debt burden and aren’t likely to achieve one in the foreseeable future, the firm said July 14.

Home loan guarantors Fannie Mae and Freddie Mac, which were placed under government conservatorship in 2008, have a “direct reliance on the U.S. government,” S&P said in today’s statement.


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