What embarrassment happened...

...to Japan some years ago and now might just possibly be on the cards for the U.S.? Losing their triple A. The WSJ reports:

The performance of government-sponsored enterprises like Fannie Mae and Freddie Mac could have a direct impact on the national economy and, more importantly, U.S. credit standing.

So-called GSEs enjoy implicit government guarantees and could cause the U.S. to lose its sterling triple-A rating if the government were forced to come to their rescue, Standard & Poor's said in a report Monday.

Add the FHLBs into that mix, and you do have a combustible mixture.

Update. FT alphaville has this picture to show the importance of the GSEs portfolios to the banking system.
Just look at how that river of mauve is widening across the page. Meanwhile the WSJ estimates the cost of bailing out Fannie and Freddie at 10% of GDP.