The fallout from the nation's credit downgrade continued Monday, as Standard & Poor's announced government-sponsored housing giants Fannie Mae and Freddie Mac were also getting their top rating slashed.

The two government-sponsored enterprises saw their credit rating from S&P fall from AAA to AA+ after the rater dropped the nation's rating to the same level on Friday.

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Fannie and Freddie back roughly 90 percent of all new mortgages created in the United States.

Raters have noted that the two government-sponsored enterprises' (GSEs) ratings are closely tied to the nation's, especially since the federal government brought the two under federal conservatorship during the 2008 subprime mortgage crisis.

S&P said their downgrade is a reflection of the GSEs' "direct reliance" on the federal government.

"Their ability to fund operations relies heavily on the U.S. government," stated S&P.

The firm went on to say the GSEs enjoy both implicit and explicit support from the federal government as the Treasury has pumped capital into them as needed in the past.

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The downgrade could intensify pressure to wind down the ailing enterprises, as has been the stated goal of many congressional Republicans. However, for the time being, Fannie and Freddie are still integral cogs in the nation's housing finance system, backing the vast majority of new mortgages created.

In addition, S&P also downgraded 10 of the 12 Federal Home Loan Banks to AA+ because those ratings also move in lockstep with the nation's. Those regional banks are sponsored by the federal government and are charged with the mission of funding to financial institutions for home mortgages and small-business lending. The other two banks already had AA+ ratings.

The federal government took over Fannie and Freddie in 2008 as the subprime mortgage market began to collapse. As the financial crisis deepened, many feared the entitites lacked sufficient capital to continue supporting the housing market.

The conservatorship functioned as a sort of bankruptcy for the mortgage giants, allowing the government to step in and remove top executives while serving as a financial backstop.





Updated at 11:03 a.m.