S&P Downgrades WaMu

Citing a worse mortgage market than expected even two months ago, Standard & Poor's Ratings Services has lowered the long-term counterparty credit ratings of Washington Mutual Inc., Seattle, and Washington Mutual Bank. WaMu's counterparty rating was downgraded from BBB-plus to BBB, and WaMu Bank's was downgraded from A-minus to BBB-plus. S&P also placed all its WaMu ratings on CreditWatch with negative implications. "We now believe that the severity of losses on all residential mortgages will be higher that we had thought and that the weak housing market will now be a longer cycle," said S&P credit analyst Victoria Wagner. S&P said it also has a more negative view of the overall economy, which could "push loan losses and loan delinquencies much higher than we previously factored into the WaMu ratings." Despite the downgrades, S&P said WaMu "has made significant strides at shoring up bank and holding-company liquidity and has substantial liquidity at the holding company to meet all of its fixed-income and dividend obligations through the next few years."