In line with Fitch cutting the U.S. credit rating from the top-ranked AAA to AA+, the ratings agency Wednesday downgraded mortgage giants Fannie Mae and Freddie Mac to AA+.

“The downgrade is consistent with the recent action taken on the U.S. and is not being driven by fundamental credit, capital or liquidity deterioration at the firms,” Fitch said in a release.

Fitch said that “key rating drivers for aligning Fannie Mae’s and Freddie Mac’s ratings to the U.S. rating including their mission-critical function to the U.S. housing finance system and the U.S. Treasury’s Senior Preferred Stock Purchase Agreements.”

Should the liquidity in the capital markets deteriorate over an extended period of time without U.S. government intervention, Fitch said it would revisit its rating of the two government-sponsored enterprises (GSEs).

Fannie and Freddie guarantee 70% of the mortgages in the U.S. by buying mortgages from lenders and repackaging them for investors, with the end purpose of keeping mortgages at affordable rates for borrowers. Chartered by Congress, the GSEs are regulated by the Federal Housing Finance Agency. Fannie primarily deals with large, commercial banks, while Freddie works with small banks and credit unions.

Fitch downgraded the U.S. credit rating on Tuesday because debt ceiling negotiations went into the 11^th hour, raising the risk of the U.S. defaulting on its debt. The flow of funds to the Freddie and Fannie could be disrupted should the United States default on its debt, Fitch said.

Treasury Secretary Janet Yellen on Wednesday called Fitch’s U.S. credit downgrade “entirely unwarranted,” pushing back against the second-ever decrease by a major ratings agency. The last time the U.S. credit rating was downgraded was in 2011 when the federal government shut down.

The Biden administration also voiced its firm disapproval of the downgrade for the nation’s credit rating.

Some Washington pundits say the debt ceiling problem has not been solved, just postponed until January of 2024.

“The federal government has spent more money than it received in tax revenue in 56 of the last 60 years,” notes Michael Busler, a public policy analyst and a professor of finance at Stockton University in Galloway, N.J.  “The accumulated debt now totals more than $32 trillion, with most of that debt incurred since 2001. This reckless spending has caused numerous problems. Fitch says the downgrade was necessary.”

Busler says the government could solve the debt ceiling crisis by reducing spending, “instead of kicking the can down the road, which is what the last four administrations have done.”