Threat to Credit Rating and Poor Earnings Depress Stocks (UBS, BAC)

Credit agencies testifying before Congress today raised the very real threat of downgrading the federal government’s credit rating, though they did not believe an outright default was likely. As a result, stock prices fell today, with the Dow down by almost 200 points. In corporate news, Fannie Mae and Freddie Mac are suing UBS AG (UBS) for misrepresenting the level of risk of the mortgage debt it sold to them. Bank of America (BAC) meanwhile has begun to offload the houses it foreclosed on but couldn’t sell by donating them and in some instances contributing to their demolition.

Word on the Street

• Continuing uncertainty and poor earnings calls brought stocks down today.
• Standard and Poor downgraded Greece’s credit rating to junk status.
• Fannie Mae and Freddie Mac are suing UBS AG (UBS) for misrepresenting the risk levels of mortgage debt.
• Credit agencies believe an outright default is unlikely, but could downgrade US’s credit rating.
• Bank of America (BAC) has begun donating and demolishing houses it has foreclosed.

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