S&P threatens broad downgrade of finance companies

Reuters

NEW YORK (Reuters) - Standard & Poor's on Friday put a broad range of financial companies on negative credit watch, warning they could all be downgraded soon if the United States has its credit rating cut.

The move added fresh pressure to the Washington negotiations over raising the country's debt ceiling, which has already prompted S&P to put the sovereign ratings of the country on negative watch.

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The S&P action takes in Fannie Mae <FNMA.OB>, Freddie Mac <FMCC.OB>, all "AAA"-rated insurers, clearinghouses, fixed-income and exchange-traded funds and hedge funds, some Federal Home Loan Banks and Farm Credit System Banks, among others.

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

The clearinghouses in particular guarantee contracts tied to everything from oil contracts to shares of Google <GOOG.O> and are critical to U.S. financial-market stability.

(Reporting by Ben Berkowitz; Editing by James Dalgleish)