- AIG, Ex-CEO Greenberg Reach Pact to Settle Disputes
- Bank of America CEO Search May Extend Into 2010
- 'Cancer of Fraud' Permeates Health Care System: Critics
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- Judge Erases Couple's $525,000 Mortgage Payment
- For Many in US, It Will Be a Scaled-Down Holiday Season
- Where Do Pardoned Turkeys Go?
- Jobless Claims Below 500,000, Durable Orders Slip
- Activision Prepares to Double Dip on ‘Modern Warfare 2’
- 4 Thanksgiving Week Buys For Your Portfolio: Market Pros
- There's a 'Great Chance' For a Double-Dip Recession: Strategist
- Revenge of the Gangsta Nerds
- Will TCU See The "Flutie Effect?"
- Retail Earnings and Sales to Improve in Q4: Analyst
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
MOST SHARED
- Garlic Price Rises Surpass Gold, Stocks in China
- New-Home Sales Jump 6.2% To Highest Level in Over Year
- S&P Stocks Trading at New 52-Week Highs
- Where Do Pardoned Turkeys Go?
- Judge Erases Couple's $525,000 Mortgage Payment
- The Executive Job Search
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- Salvation Army's Kettles Now Credit Card-Ready
- US Plans to Reduce Emissions By 17% Within Next Ten Years
- Consumer Mood Improves, But Anxiety Over Personal Finances
Text Size 
Standard & Poor's said on Friday it may cut its ratings on the preferred shares and subordinated bonds of Fannie Mae and Freddie Mac, citing concerns that U.S. government plans to shore up the mortgage finance companies may subordinate the debt.
 |
AP |
The U.S. House of Representatives passed a housing rescue bill on Wednesday while the White House dropped a threat to veto it, which would give Fannie Mae and Freddie make a government lifeline.
"There is still ambiguity on the part of regulatory authority as it applies to how nonsenior creditors of Fannie Mae and Freddie Mac would be treated if the U.S. Treasury ever acted on its three-point liquidity plan," S&P said in a statement.
"The language in (the housing bill) increases the likelihood that subordinated debtholders and preferred stockholders would face greater subordination risk," S&P said.
This risk is not currently reflected in the agencies' subordinated debt and preferred shares, S&P said. It rates both Fannie Mae and Freddie Mac's subordinated debt and preferred shares "AA-minus," the fourth-highest investment grade.
These ratings may be cut by one or two notches at the conclusion of the review, S&P said.
"Both firms face weak earnings due to rising credit expenses," and are likely to experience higher stress on capital and earnings over the next several quarter, S&P said.
"The confidence crisis in the equity markets is adding to the already stressed business cycle and creates additional challenges in the near term for capital-raising initiatives," S&P said.
Shares of Fannie Mae [FNM
Loading...
()
] were down about 5 percent Friday, while Freddie Mac [FRE
Loading...
()
] shares lost more than 6 percent.
The S&P announcement somewhat offset upward momentum in the stock market that had come from crude oil's decline and better-than-expected economic data.
Print
Email
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
- Eric Schmidt pledges to create a virtual copy of the Iraq National Museum at Google’s expense.
- Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
- More shoppers than ever plan to comparison-shop this season. Who will benefit?
- It may be the most unusual guide to business you'll read.
- How can you get out of debt and back on the road to recovery? Follow these ten steps.
Data is a real-time snapshot *Data is delayed at least 15 minutes