US might lose credit rating

The Financial Times is reporting:

The US government's need to provide financial backing to the state-sponsored mortgage financiers that dominate the US housing market could pose a risk to the country's triple-A credit rating, Standard & Poor's, the credit rating agency, said on Monday.

In the event of a deep and prolonged US recession, S&P said the potential costs of propping up government-sponsored enterprises (GSEs) like Fannie Mae (NYSE:FNM) and Freddie Mac, which have implicit government backing, could cost the US government up to 10 per cent of GDP

WOW. 10% of GDP. WOW.

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