Moody’s and Fitch today both said they would cut Residential Capital to junk status. ResCap’s rating was bumped down by one notch to Ba1 from Baa3, and Fitch downgraded it to BB+ from BBB. Moody’s also said it would keep the ratings on review for a potential downgrade.

Moody’s also said it might swipe directly at GMAC, the auto finance subsidiary of General Motors, raising the specter of ratings issues that had long been thought to have ended last year.

Last year, ratings agencies essentially forced GM to sell a 51% stake in GMAC to Cerberus to save the finance business’ investment-grade rating from being infected by GM’s own junk status. The agencies also said they might cut ResCap’s ratings if the business was not separated from GM.

Moody’s said: “The transaction also reduced GMAC's direct exposures to GM and improved the firm's prospects for strengthened profitability and liquidity, in Moody's view.”

But today, GMAC and ResCap’s grace period came to an end. Moody’s wrote: “Should Moody's come to view GMAC as a probable supporter of ResCap to its own potential detriment, GMAC's ratings would likely be equalized with ResCap's ratings.”

Moody’s added: “GMAC's ongoing business concentrations with GM and its dealer network pose continuing risks to GMAC's operating metrics and access to confidence sensitive funding, which constrains the firm's ratings. GMAC's ratings are supported by such qualities as its strong risk management and liquidity management disciplines.”

The three big ratings agencies, Standard & Poor’s, Moody’s and Fitch, have been taking severe action against mortgage businesses following criticism that they did not downgrade sub-prime-related companies fast enough. Reportedly, the SEC is investigating the agencies.

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