S&P Downgrades Fannnie and Freddie Too

The government-backed mortgage lenders are the first credit casualties of the downgrade

After it knocked the United States' credit rating from AAA to AA+ on Friday, Standard & Poor's went on to do the same to the federally backed mortgage lenders Fannie Mae and Freddie Mac on Monday. CNN Money reports:

It was widely expected that S&P's downgrade of U.S. debt would roll downhill to other entities that are closely linked to the federal government.

Fannie and Freddie, which were taken over by the government in 2008, fuel home sales by purchasing mortgages from banks.

"The downgrades of Fannie Mae and Freddie Mac reflect their direct reliance on the U.S. government," S&P said in a statement.

The agency issued its latest downgrade as its own parent company's stock tumbled on Monday. According to MarketWatch, "shares of McGraw-Hill Cos. were down 6.7% after Treasury Secretary Timothy Geithner criticized its Standard & Poor's unit for downgrading its U.S. credit rating to AA+ from AAA." Geithner appeared on Meet the Press on Sunday, where he said the rating agency's decision showed "terrible judgment" and "a stunning lack of knowledge" about financial policy in the United States.