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Monday Morning Cup of Coffee


Leaders in government and finance came out swinging after Standard & Poor's downgraded the U.S. sovereign debt  rating from triple-A to double-A Friday afternoon, with Treasury Secretary Timothy Geithner telling CNBC the move showed terrible judgment and Warren Buffett sounding off on Fox News for a brief moment saying it doesn't make sense.

S&P is holding a conference call Monday morning at 8:45 EDT to discuss the reasoning behind the downgrade and the challenges they foresee ahead for the U.S. in terms of its sovereign debt rating and political gridlock on financial issues.

Meanwhile, an issue HousingWire raised about the credit ratings agencies last week resurfaced in the wake of S&P's downgrade.

Analysts were quick to point out the ratings of CRAs have at times been fickle in the past, citing some of their work on residential mortgage-backed securities as an example. In a U.S. Senate report released earlier in the year, lawmakers railed against the ratings giants, suggesting they initially assessed the ratings on mortgage-backed securities inaccurately when assigning triple-A ratings to the products and created a domino effect in the financial markets when they abruptly pulled back on some of those MBS ratings in 2008.

Last week, S&P acknowledged it may have swung too deeply in MBS downgrades that were made in 2010, prompting it to issue a release upping the ratings on those same deals.

The U.S. debt crisis that culminated last week with investors fleeing the market, resulted in anemic IPO activity, with only one IPO scheduled for the week managing to price, according to Renaissance Capital. American Capital Mortgage (MTGE: 18.63 0.00%) made it to market Thursday, but sold only 8 million of the planned 17.5 million shares, closing down 8% from its IPO price of .

Fitch Ratings moved title insurer Fidelity National Information Services Inc. off of its list of firms facing a new threat of downgrade, according to BusinessWeek. The Jacksonville, Fla.-based insurer was placed on negative ratings watch in June over discussions related to its attempt to buy Misys PLC. With those discussions now over, the company's issuer default rating is affirmed at Double-B plus, with the outlook stable.

Wells Fargo & Co. (WFC: 25.21 0.00%) is reporting that it had about 696,085 active or completed mortgage modifications in place by June 30 of this year. That total number dates back to 2009.  About 85% of those loans were modified through the company's programs, about 104,864 loans were handled through the fed's Home Affordable Modification Program.

Two banks were closed by regulators last week. Bank of Whitman out of Colfax, Wash., was closed by the FDIC and state regulators Friday.  All deposits were transferred to Columbia State Bank in Tacoma, Wash.

Bank of Shorewood of Shorewood, Ill., also was closed by regulators. All deposits and accounts have been moved to Heartland Bank in Bloomington, Ill.

Write to: Kerri Panchuk.


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