Moody's is reportedly on the verge of 2-3 NOTCH DOWNGRADES of all the too-big-to-fail US banks. Bank of America, JP Morgan, Citigroup, Morgan Stanley, Wells Fargo, and Goldman Sachs all face possible 2-3 notch downgrades according to Moody's.
Now this couldn't be over Euro contagion could it? We all know that the billions in credit default swaps sold to European banks can't possibly be a liability to the Big 6, right? Right?
Moody's Investors Service is expected to announce downgrades to large global banks that play an outsized role in the capital markets, due to "Eurozone weakness and elevated economic and market uncertainties," according to a research report published Monday by CreditSights.
Bank of America ,Citigroup , JPMorgan Chase ,and Wells Fargo are among U.S. institutions likely to see downgrades.
"The agency alluded to possible two- to three- notch negative impacts for all these players, but more particularly to the pure-play capital market players such as Goldman Sachs and Morgan Stanley ," the report states, citing comments made on a Feb. 1 conference call.
The agency will likely reduce "standalone" ratings for the group as a whole "from the single-A range to the Baa range probably beginning in the first quarter of 2012 with a review notification and ratings actions within 90 days or so thereafter," according to the report. Standalone ratings refers to ratings that assume no government support for the banks in question.