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S&P threatens to downgrade European Union, big European banks, in wake of eurozone action
FRANKFURT, Germany (AP) ' Standard & Poor's threatened Wednesday to downgrade the European Union's triple-A credit rating, two days after adopting a similar stance toward many countries in the region.
S&P said its review would assess the ability of eurozone countries to support the EU's repayment of its debts. The 17 eurozone countries contribute about 62 percent of the EU's revenue.
On Monday, S&P had said it might downgrade 15 of the 17 members of the eurozone because of the region's debt crisis.
In extending that warning to the entire EU, S&P cited "deepening political, financial and monetary problems" in the eurozone.
S&P also warned that it might downgrade some of the region's largest banks, including France's Societe Generale, Italy's UniCredit SpA and Germany's Deutsche Bank. It said it would further assess the financial health of both the banks and the governments of their home countries.
S&P's reviews come just before European leaders hold a summit aimed at resolving the 2-year old debt crisis. On Tuesday, its analysts criticized European officials for failing so far to craft a comprehensive response. The agency said previous efforts to resolve the crisis "have been defensive and piecemeal."
The reputations of credit ratings agencies were battered after S&P and its main competitors, Moody's Investors Service and Fitch Ratings, gave top marks to financial instruments tied to subprime mortgages. The agencies failed to foresee the collapse of the housing bubble and the subsequent financial crisis.
Still, their ratings continue to carry weight with mutual funds, pension funds and other institutional investors. Some of those institutions are barred from owning bonds without top credit ratings.
AP Business Writer Christopher S. Rugaber in Washington contributed to this report.