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Subscribe to RSSStandard & Poor's Ratings Services has lowered its credit ratings for many of the world's largest financial institutions, including the biggest banks in the U.S.
Bank of America Corp. and its main subsidiaries are among the institutions whose ratings fell at least one notch Tuesday, along with Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co.
S&P said the changes in 37 financial companies' ratings reflect the firm's new criteria for banks, and they incorporate shifts in the industry and the role of governments and central banks worldwide. The agency did not release its evaluation of each company but said it plans to discuss the changes during a conference call early Wednesday.
Bank of America's issuer credit rating was cut to "A-" from "A," as were its Countrywide Financial Corp. and Merrill Lynch & Co. Inc. units, along with a series of related subsidiaries
Ratings downgrades are never seen as positive, but this round may be particularly damaging for Bank of America.
Concern already was growing Tuesday about whether B of A has enough capital to withstand another downturn in the U.S. economy or further trouble in Europe, and the bank's stock fell to a two-year low before the ratings announcement.
The Charlotte, N.C.-based bank said in a recent regulatory filing that downgrades from S&P or Fitch Ratings, which also is reevaluating its ratings, "could likely have a material adverse effect on our liquidity" and cut off its access to credit markets.
It typically costs companies more to borrow when their credit ratings are cut, the same way a decline in a person's credit scores drives up the interest rates that banks and credit cards will offer him.
Downgrades could hurt parts of the bank's businesses where creditworthiness is critical, Bank of America said in a filing Nov. 3 with the Securities and Exchange Commission.
A downgrade also could trigger provisions in derivative contracts that require B of A to put up more collateral, and it could terminate the contracts, resulting in losses and hurting the bank's liquidity. The bank posted a $6.2 billion profit for the third quarter, mostly the result of accounting gains and the sale of a stake in a Chinese bank, but it was still moving toward a loss for the year as of Sept. 30.
Bank of America shares fell 17 cents, or 3.2 percent, to close Tuesday at $5.08 and lost another penny after hours.
S&P cut its rating on Citigroup Inc.'s credit to "A-" from "A"; a series of its subsidiaries also saw changes. Citigroup shares closed up 19 cents, at $25.24, and lost 14 cents aftermarket.
Goldman Sachs also was cut to "A-" from "A," which triggered some downgrades for subsidiaries. The investment bank's shares closed regular trading down $1.62, at $88.81, and lost another 12 cents in late trading.
JPMorgan Chase's rating also dropped to "A" from "A+," and its Chase Bank unit was downgraded to "A+" from "AA-" and other subsidiaries ratings also changed. JPMorgan Chase took the place of Bank of America as the nation's largest bank in recent months.
The bank's stock lost 6 cents aftermarket after closing the regular session down 60 cents, or 2 percent, at $28.56.
Morgan Stanley's rating slipped to "A-" from "A" and several of its units also got cut one notch. Shares slipped 9 cents in late trading from their close down 49 cents, or 3.6 percent, at $13.31.
Wells Fargo fell to "A+" from "AA-" which likewise triggered downgrades for several subsidiaries. Shares closed down 7 cents at $24.08, then lost 18 cents aftermarket.
In addition, Bank of New York Mellon Corp., the sixth biggest bank in the U.S., was cut to "A+" from "AA-," and some units were downgraded. Bank of New York Mellon is a custodian bank, which collects dividends on stocks and holds cash deposits, among other things, on behalf of its customers, which are mainly large pension funds and money market funds. The stock closed down a penny at $18.08, then lost 8 cents in late trading.
Top U.K. downgrades include Barclays PLC, HSBC Holdings PLC, Lloyds Banking Group PLC and The Royal Bank of Scotland.
Ratings for several big European banks, including Credit Suisse, Deutsche Bank, ING Groep N.V. and Societe Generale were unchanged, but in some cases they were given a "negative" outlook.
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Does 'A-' or 'A+' mean bankrupt?
If we had let the market decide instead of letting Bush sign TARP, it would have.
Hummmmmmmmmmmmmm ..... .. I wonder what their grade would be if the fed hadn't secretly infused eight trillion dollars in them during the crunch? ...
C- ?
...... Have we constructed a "Spanish Armada" like financial system?
love to call bank of america board member and say how it feel to have your credit rating lowered for no reason .these people are the worst people in the world. alway trying to screw the customer. what goes around comes around i hope.
Their downgraded so their buildings should go into foreclosure..
If not for Bernanke, Bank of America and city Bank would not have any credit rating at all !
They( The banks ) would be a whole lot smaller if not extinct by now,
but remember, the bail outs were necessary because if not,
everyone would be eating Rat meat on the streets today.
alan_static:
Only when referring to the morals of the bankers.
Too big to fail simply means they are too big. If you are an individual with money in any of the big banks, you should move it now, they will fail and when they do, the FDIC has 30-90 days to pay off. Once the dominoes start to fall, you don't want to be crushed.
As Barney Frank alluded yesterday in an interview on the Rachel Maddow show yesrterday, rating agencies finally read the "Dodd-Frank Act" which plainly states the US will no longer bail out its largest financial institutions. But somehow TeaPubs feel this is job killing regulation and should be repealed along with the Affordable Care Act, and are going to great lengths to block the staffing of a Consumer Agency meant to protect you and I from predatory lending practices.
This would sit well with me if I could just somehow understand how shooting myself in the foot, AGAIN, and cutting my own throat will somehow benefit America.
Who says they don't? Thanks to the corporate lemming republicans, the FDA can only afford to inspect a few percent of food getting sold out there, I have no doubt many many Americans are feasting on rat, dog, cat today.
It's about time. If the credit ratings issuers weren't making so much money on the banks for looking the other way while they traded AAA trash, this would have happened in about 2006. Why now? Do they suspect the Democrats will sweep the field and finally regulate them like they should have been all along? Hm.
And only 1 notch? I guess that makes drug dealers and loan sharks 'A' rating credit risks.
You are right about the credit ratings issuers. Who is it that rates them??
The banks should NEVER have been deregulated. That is when they started all the trash, and junk mortgages and other investments that our government did not look to close at.
And that was the first mistake of all past and present administration in the White House.
HAD our IGNORANT CONGRESS let them sink or swim instead of giving them tax payer money, taxpayers would be billions ahead of the game, and the banks in this country would be the better for it today.
Just because you sit in congress DOES NOT MEAN that you know what is best for this country. There are a lot more qualified people to make those calls. To bad our government has devolved into nothing more than a mouth piece for the banks and wall street.
Was it not the government that made the rules???? So the banks played by the feds rules and it was obviously the wrong rules. Not all the banks fault IMO
And who did you think help write those rules?
Actually the banks lobbied to rewrite the rules - they wanted Glass Steagall nullified. That meant there was no separation between regular banks and financial institutions like Goldman Sachs. That deregulation heavily lobbied for by the financial industry was supported by Alan Greenspan and passed under Clinton with a Republican majority in Congress. Both parties are responsible for the deregulation but the banks wanted and lobbied for the deregulation which in essence allowed them to create Mortgage Backed Securities and Credit Default Swaps. So I would say they did themselves in the greed bastards.
This from the group that gave AAA ratings to junk MBOs and then proceeded to downgrade the US debt. I believe you.....NOT.
And the beat goes on. This is just the beginning. Wait and see.
Crooks grading Crooks...that's rich, or maybe rich is the keyword?
As I was watching Squawk Box this morning there was an interview with one of the board members on the banking commission on. He made a statement that the banks at this point have more money than ever, some have more now that the last 70 years. I find this statement, if true, insulting and hurtful of the banking industry. They would have any of this if it weren't for the bailouts, plus the coming to light of the MASSIVE amounts of money given to them from the Fed. The S&P's decision also plays into the fact that power has moved from the United States to Asia. If a down grade is all they have to suffer for the damages, humiliation and indignity the American people will endure for many years, the got off easy!
It is absolutely a travesty of justice. While bankers get richer, citizens lose homes, retirements, jobs, cars, college educations.
It is so pathetic it just turns my stomach. It's time to really rise up.
Tens of thousands already are in protests across the country. I find it interesting how many people try to smear them instead and pretend everything is just peachy.
Too little, too late. I downgraded all of them a long time ago, and that includes the three stooges, S&P, Moody's, and Fitch.
Local banks and credit unions, not affiliated with the larger corporate financial banks is the future, if you do not want to feed the greed.
This just in: S&P has themselves been downgraded to a bunch of posturing old farts.
Love it. These guys should just sit down and shut up since they are majorily responsible for the mess in the first place.
Not to worry, Jesus is still and will always be A+ in every way. :O)
uh huh and if your mortgage is in arrears just call the tooth fairy.
Just think of a simple example I could cite on the issue of de-regulations in Banking or any other industry or services: We have traffic laws rules and regulations but yet we humans speed, run red lights, drive without headlights in the dark, so it makes me shudder of the conequences that, if we had no traffic laws,rules and regulations to conduct ourselves. Can anyone imagine the chaos,fights and even murders will happen on our roads and innocent people would suffer. Is'nt it?
Now transpose the same idea to the Banking industry or any other industry or services and think what would be the result to for majority innocent people in the society.
It's not Rocket Science .
Alpha Omega
As a Realtor for 30 years I could see this coming. I would try to tell other Realtors that the prices of homes were going up to fast but no one wanted to listen.
When a home buyer gives the same consideration to the purchase of a home as they did to buying breath mints then something had to give. Well here we are and we got here by our own devices.
Buying a home is a privilege but was noted treated that way.
New World Order. Keep repeating. NWO. This is all part of a grander plan. I didn't realize how involved the S&P would be in it, but it's clearly another division of the greater corporate greed.
Thanks for the list of banks to never, ever do business with again! There is nothing us peons...I mean ordinary citizens can do other than never have an account at a bank that's too big to fail, and vote.
How are these banks not rated a D or F considering their blunders?
Just got to Love these Ratings agencies. The same clan who said Liar Loans and No Documentation Loans were Triple AAA rated.
I suppose they want us to believe Up is Down and wrong is right.
Now all the Banks are Back to the Fancy Credit Looking Cards again as if Credit Cards are Magic. Do you think they are going to give you something for nothing. Why would anyone in their right mind pay some stranger to use the money they already earned. It is called Usury.
Save your Pennies and if you don't have the cash, don't buy it and I promise you will never get in trouble also if it sounds too good to be true it almost always is.
The Euro-union crisis will be the other shoe to drop. After European leaders run out of gimmicks we will see 2008 all over again, all across the world. It will be worse this time because there will be no TARP money. The problem will not magically disappear. The great "reset" must be allowed to happen.
Agree. If we had not intervened previously, the crash would have impacted everyone's checking and savings accounts, not just their 401Ks. It would have woken enough people up to implement real financial reform. Time to separate commercial banking from investment banking again.
Watching B of A crash and burn warms my heart...
All the Too Big to Fail Banks need to be Broken up into smaller, more managable parts that won't take the Global economy down when they fail and expect the Tax Payers to bail them out again. Also, just like Ma Bell was Broken Up, a lot of the Phone Companies need to be Broken up again. Big Oil too and any other Monopolies. They are just Bad for Global well being and prosperity.
America needs its Modern Day Teddy Roosevelt A.S.A.P., The First Trust Buster. The same Man who Broke Up Standard Oil which is Exxon today...
That tinkling sound you hear in the background of life is the economy fracturing a bit more.
Start putting your money into gold buillion (not stocks) (store it in a foreign land, maybe Canada, so the government can't confiscate it, if they make it illegal), silver (you can probably keep it locally) and maybe oil and gas stocks.
Time to repeal the Gramm–Leach–Bliley Act, thus reinstituting the Glass-Steagall prohibition on mixing commercial banking with investment banking. Force them all to spin off their investment banking operations and institute higher minimum capital ratios for commercial banking. Then when the investment banking companies screw up we can let them go bankrupt.
By putting our trust in these thieves, we have doomed ourselves. The people have mistakenly put the financial, energy, etc... conglomerates in control of our government(s). These "power players" were NOT elected, and have the ability to brainwash the masses to vote for THEIR flunkies! "CLEAN GOVERNMENT" amendment.... NOW!
IF everyone gets down graded a notch then it all don't matter as they will still be even on ratings. I think S & P should be knocked down several notches after giving the AAA rating when things were wrong.
This is the same group of petty jerkoffs that downgraded the U.S. just to make a point, admitting that American debt was still one of the safest bets around. Why would anybody listen to an organization with such little integrity.
Maybe we should pay more attention to that. Or look at Europe and all the poor pricing of risk attached to debt.
Is it out of the realm of possibility that we're amidst a global credit bubble? Or close to the "pop"?
And the market is up 400+.
And what to make of that?
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