S&P threatens downgrade of U.S. financial companies

Standard & Poor's on Friday raised the pressure on debt negotiators in Washington, saying it could downgrade insurers, securities clearinghouses, mortgage agencies and a laundry list of other firms without a deal soon to lift the debt ceiling and cut the deficit.

While S&P had already made clear it could downgrade the United States' sovereign credit rating, the Friday move struck directly at the heart of the financial system, raising the prospect of knock-on effects should the country exhaust its ability to borrow to pay bills.

S&P characterized its targets as "entities with direct links to, or reliance on, the federal government."

I'm not sure what the implications of a downgrade on US financial institutions could be though the following provides some clue....

"S&P is firing a warning shot, saying the entire financial clearing system is in question," said Peter Niculescu, a partner at Capital Markets Risk Advisors, a risk management advisory firm in New York.

He raised the prospect of a financing squeeze for financial institutions if Treasury debt is downgraded. S&P said Friday it still sees the risk of default as "small, though increasing."

S&P threatens downgrade of U.S. financial companies

Thus a downgrade of the US credit rating might have some financial repercussions on financial institutions where their capacities become undermined one way or other.

Someone else might have some better insight into this?

Cheers

Most major US corporations have had massive amounts of garbage on their books since the late 1990's the true value of an organisation is what is its value if you had to wind it up quicky and with many of these firms you'd be way into negative territory,no S and P and Moodys musings is more about the banksters not happy with the game going on on the taxpayers slate unchallenged than real financial assessment treasury and the fed have trillions in off balance sheet items that would be rated as 'junk' the current AAA rating is a joke.