S&P Downgrade: Ratings Agency Cuts Fannie Mae, Freddie Mac

It looks like the U.S. Government isn't the only one taking ratings hit. Standard & Poor's (S&P) Monday cut Freddie Mac's and Fannie Mae's long-term ratings one notch on Monday.

S&P said the downgrades from the top-notch Triple-A to AA+ were due to its lowering of the U.S. sovereign credit rating late on Friday.

"The downgrades of Fannie Mae and Freddie Mac reflect their direct reliance on the U.S. Government," the rating agency said.

S&P Downgrades of U.S., Fannie, Freedie - A Wake-Up Call for U.S.?

Meanwhile, the talk in Washington was that the S&P downgrade of the U.S. Government would likely increase pressure on the new Congressional "supercommittee" to end ideological differences and political posturing to quickly devise a substance deficit reduction package that goes beyond the $1.5 trillion called for in the recently-passed U.S. debt deal that also raised the nation's debt ceiling.

"I think this is one of the most telling, important moments in our country's history right now," Senator John Kerry, Democrat of Massachusetts, said Sunday on the NBC program "Meet the Press." He added: "This poses a set of choices not just about a recession. It's about a financial crisis and the structure of our economy, which really has been misallocating capital."

However, the above is not to say that the U.S. Treasury Department has changed its stance regarding S&P's controversial decision regarding the U.S. Government: it haven't.

The U.S. Treasury Department believes S&P erred by at least $2 trillion in its deficit projection, with the department adding that U.S. bonds were as safe now as they were last week.