Ratings of three banks cut by Moody’s
NEW YORK | Moody’s Investors Service has lowered some of the debt ratings for Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., saying it is now less likely that the U.S. government would step in and prevent the lenders from failing in a crisis.
The ratings firm said Wednesday that it believes the government is likely to provide some level of support for financial institutions but is also more likely now than during the 2008 financial crisis to allow a large bank to fail should it become financially troubled.
Moody’s downgraded long-term debt ratings for Bank of America and Wells Fargo Bank N.A., and cut Bank of America’s short-term rating and Bank of America N.A.’s long-term deposit rating.
The firm confirmed Citigroup’s long-term rating but downgraded its short-term rating.
Group: Financial risks rising in U.S. and Europe
The International Monetary Fund says the global financial system is more vulnerable than at any point since the 2008 financial crisis.
Risks to banks and financial markets have increased in recent months, the global lending organization said in a report Wednesday. The European debt crisis is affecting its banking system to the point where banks may pull back on lending to conserve cash, which threatens to worsen growth in the region.
Meanwhile, there are growing doubts that the U.S. lawmakers can forge the political consensus needed to reduce its growing budget deficits. Rising deficits were a key reason Standard & Poor’s downgraded long-term U.S. debt last month.
European leaders should quickly implement an agreement reached in July that provides the region's bailout fund with more flexibility, while the U.S. and Japan must phase in steps to reduce their deficits, the IMF said.
Forecasts point to modest holiday growth