Rating Firms To Hold Off Downgrades Of Big Banks
Credit-ratings firms say they plan to delay issuing any credit-rating downgrades to the largest U.S. banks as a result of new financial regulation.</br></br>Moody's Investors Service analysts on Thursday said that, under the overhaul bill passed by the Senate last month, the government still has some room to bail out the biggest banks, at least in the short term -- an option it will likely choose as long as the economy and markets are unsettled.</br></br>"Consequently, we expect that the senior debt and deposit ratings of systemically important banks in the U.S. will continue to benefit from unusual levels of support," Moody's analysts wrote in a report, "until the economic recovery is sustained, financial market health is restored, and the risks of attempting to unwind an interconnected institution are reduced."</br></br>Moody's didn't specify which banks it considers systemically important, but the short list likely includes Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley.</br></br>The Moody's Corp. unit and McGraw-Hill Cos.' Standard & Poor's in the past have warned that the government's implied support of banks considered to big to fail means they get higher credit ratings than they otherwise would, usually between one and five notches. The ratings companies have said that any overhaul bill undercutting that support could result in downgrades.