NEW YORK - August 8, 2011 - Standard & Poor's downgraded mortgage giants Fannie Mae and Freddie Mac from triple-A to AA+ Monday, citing their direct reliance on the U.S. government, which it downgraded last Friday.

S&P also downgraded 10 out of 12 Federal Home Loan Banks and the senior debt issued by the Federal Farm Credit Banks.

The downgrades were expected after S&P cut its U.S. sovereign rating also from AAA to AA+ on Friday, citing a dangerously rising debt burden and the inability of Washington's battling politicians to come up with a credible long-term policy to cut the country's deficits.

Fannie and Freddie are businesses that buy up mortgages from banks and mortgage brokers to keep rates low and help homebuyers. They currently hold about half of all U.S. mortgages.

Always under government oversight, both had to be rescued after the 2007-2008 financial crisis.

"The downgrades of Fannie Mae and Freddie Mac reflect their direct reliance on the U.S. government. Fannie Mae and Freddie Mac were placed into conservatorship in September 2008 and their ability to fund operations relies heavily on the U.S. government," S&P said.

"In addition to the implicit support we factor into our ratings, the U.S. Treasury has demonstrated explicit support by providing these entities with capital quarterly, as necessary."