S&P cuts Washington Mutual

Standard & Poor's said it lowered the long-term counterparty credit rating on Washington Mutual Inc. to BBB from BBB+ and its long-term counterparty credit rating on Washington Mutual Bank to BBB+ from A-. The A-2 short-term counterparty credit ratings on both companies were unaffected.

All ratings were placed on CreditWatch with negative implications.

"These rating actions reflect our expectations for a more severe residential mortgage credit cycle than we had anticipated at the start of 2008," S&P credit analyst Victoria Wagner said in a written statement.

"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. This adds to the timeframe to resolve foreclosed properties and the cost to carry these nonperforming assets," Wagner said.

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