Home > Man-Made Disasters > Outlook Negative: S&P Downgrades Dozens of Global Banks, U.S. Stock Futures Decline

Outlook Negative: S&P Downgrades Dozens of Global Banks, U.S. Stock Futures Decline

By Dunstan Prial – “Standard & Poor’s on Tuesday cut its credit ratings for many of the world’s largest banks, including Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and Bank of America (NYSE: BAC).

The move follows S&P’s shift, announced earlier this month, in the methods it uses for rating the banks.

Citigroup, Goldman Sachs and Bank of America Corp. each had their long-term credit rating downgraded a single notch to A- from A. Similar cuts were applied to JPMorgan Chase (NYSE: JPM), Wells Fargo & Co. (NYSE: WFC) and Morgan Stanley (NYSE: MS).

Dozens of other banks were also affected by S&P’s new criteria and many of the downgrades stemmed from the affected banks’ exposure to the European debt crisis. S&P cited weaker confidence in governments’ ability to bail out struggling banks.

The new criteria for rating banks comes in the wake of criticism leveled at all three major rating firms – Moody’s and Fitch’s are the other two — that they rubber stamped their highest ratings on investment products loaded with subprime mortgages in the years leading up to the financial crisis.” Read more.

U.S. Stock Futures Decline After S&P Cuts Banks’ Credit Ratings – “U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will end a two-day rally, after S&P cut credit ratings for lenders including Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc… ‘Banks are in a difficult position,’ Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4.1 billion, said in a telephone interview. ‘There are so many unknowns for the industry, including Europe. The reward is not worth the risk right now.'” Read more.

U.S. Outlook Cut to Negative by Fitch After Committee Fails – “The U.S. lost its last stable outlook from the three biggest credit-ranking companies after Fitch Ratings lowered the nation to negative following a congressional committee’s failure to agree on deficit cuts. Fitch’s outlook on the U.S., which it still assigns its top AAA grade, reflects ‘declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path will be forthcoming,’ making the probability of a downgrade greater than 50 percent over two years, the company said yesterday in a statement.” Read more.

Categories: Man-Made Disasters
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