As the extent of the damage to monolines from deteriorating mortgage performance continues to unwind, at least one credit rating agency is busy again this week considering downgrades. Moody's Investors Service placed the Aa3 insurance financial strength ratings of monoline Financial Security Assurance on review for possible downgrade. The action comes as the firm's US insured mortgage portfolio continues to deteriorate, affecting its capital adequacy. Another monoline on Moody's review list, Assured Guaranty, recently suffered a ratings chop from triple-A to double-A by Fitch Ratings. According to a company media statement, Assured is also faces review for possible downgrade by Moody's. But Assured is not going gently into that good night, as CEO Dominic Frederico issued a response to the announcement, insisting the ability of the firm's insured portfolio to weather further economic downturn. "It appears, based on our recent discussions with Moody's, that they have once again increased their economic and housing market assumptions -- to a level significantly more stressful than that used by the Treasury in its recent stress testing of banks," he says. The changing standards used by the main ratings agencies indicates the financial guaranty industry would benefit from the formation of a single regulator with clear standards for rating purposes, according to Frederico. "We believe that the financial markets cannot and should not continue to be subjected to volatility and uncertainty due to the rating agencies' undisclosed changes in assumptions," he says in the response statement. "Moody's review of our insurance financial strength ratings may lead to near-term uncertainty and volatility in the markets that we serve -- particularly in the municipal market, where we are effectively the only major active financial guarantor." "Greater transparency of the factors and assumptions driving Moody's review would allow investors and issuers to draw their own conclusions about Moody's opinion of our financial strength," he adds. Write to Diana Golobay.