ABC News
August 8, 2011

Standard & Poor’s today downgraded the debt of Fannie Mae, Freddie Mac and 10 of 12 Federal Home Loan Banks that were propped up by the federal government after the financial crisis of 2008.

S&P reduced their ratings one notch, to AA+ from AAA, its very highest rating. The agencies guarantee or own more than half of the $5 trillion in U.S. mortgage debt.

The announcement was no surprise in light of S&P’s downgrade of the government’s debt on Friday evening, but the U.S. stock market — already spooked by Friday’s news — reacted negatively anyhow. The Dow Jones Industrial Average dropped nearly 375 points after the announcement before recovering somewhat. And the price of gold, considered a safe haven in uncertain times, topped $1,700 per ounce for the first time ever.

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