S&P lowers Downey Financial

Standard & Poor's said it downgraded the long-term counterparty credit rating on Downey Financial Corp. to B- from B+ and removed the ratings from CreditWatch negative where they were placed June 3.

The outlook is negative.

S&P said the action reflects increased concern about Downey's asset quality-induced weak financial profile, which continues to erode its franchise and resulted in material regulatory restrictions.

Despite Downey's current adequate liquidity profile, the agency said it is also concerned that continued publicity of Downey's problems could lead to material deposit outflows that would overwhelm Downey's liquidity or result in further adverse regulatory action.

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