Moody's downgrades 3 large US banks

22 September 2011

The credit ratings of three large US banks have been cut by Moody's Investors Service.

According to the ratings agency, the moves come as it is believed the federal government is not likely to offer assistance to faltering banks - as it did following the collapse of Lehman Brothers in 2008 - should another financial crisis hit the sector.

Bank of America, Citigroup and Wells Fargo were each downgraded after having been placed on notice for such action on June 2nd.

Moody's acknowledged the Obama administration is likely to offer a degree of support to lenders if and when they fall into difficulty, but warned the government "is also more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled".

The group - whose parent company is Moody's Corporation - noted such an approach could therefore serve to limit contagion and prevent another crisis taking hold.

By Tony Aynsley

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