S&P Cuts Credit Ratings on Several Large Banks

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Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
S&P Cuts Credit Ratings on Several Large Banks

http://www.cnbc.com/id/45482560

Standard & Poor's reduced its credit ratings on 15 big banking companies, mostly in the Europe and United States, on Tuesday as the result of a sweeping overhaul of its ratings criteria.

JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs Group, Morgan Stanley, Barclays, HSBC Holdings and UBS, were among the banks that had their ratings reduced by one notch each. A notch is one third of a letter rating.

Spokespersons for Bank of America, JPMorgan, Goldman Sachs, Morgan Stanley declined to comment.

AWR's picture
AWR
Status: Bronze Member (Offline)
Joined: Dec 7 2011
Posts: 33
 More downgrades are

 More downgrades are inevitable.  The rating agencies are always behind the curve and wait until the last minute (or later) for political reasons.  Take a look at this chart of "financial industry interconnectedness" (read: counterparty risk):  http://www.businessinsider.com/financial-institution-interconnectedness-2011-12?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

Pretty unbelievable, no?  Easy to see why things could get real bad real quick when short-term lending dries up when the banks -- and now governments -- don't trust each other's balance sheets.  Now it's just a matter of how much longer the "lenders of last resort" will be able to live up to their name without destroying fiat currencies.

What a house of cards!

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