California based thrift operator Fremont General Corporation was downgraded this morning by Moody's Investor's Service to a rating of Caa2 from Ba3, a lower junk rating due to low capital levels and increased uncertainty as to whether the company can meet its ongoing obligations. Ratings for long-term deposits at Fremont Investment and Loan, which operates a branch in Redlands, was dropped from B2 to B1.

Fremont was a player in the sub-prime lending market until earlier this year when it sold off nearly all of it's real estate loan portfolio. The sub-prime loans is a main driver for the higher money market and certificate of deposit rates offered by the thrift and loan.

Also this morning, IndyMac Bank has been threatened with potential downgrade to junk status.