Moody's Downgrades US Banks
After a tough day for the markets (SPY) down over 2%, Moody's added to the negative news by downgrading several major financials after the close. Morgan Stanley (MS), Bank of America (BAC), Goldman Sachs (GS), JP Morgan (JPM) and Citigroup (C) were all lowered.
The move was widely expected with all of the downgraded stocks heading lower during the session. Several banks have warned that the downgrades will affect funding costs and likely require that they put up additional collateral on some positions.
"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities", says Moody's Global Banking Managing Director Greg Bauer. "However, they also engage in other, often market leading business activities that are central to Moody's assessment of their credit profiles. These activities can provide important 'shock absorbers' that mitigate the potential volatility of capital markets operations, but they also present unique risks and challenges."
Here is the full downgrade release from Moody's.
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