NEW YORK — Standard & 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+,” while its Countrywide Financial Corp. and Merrill Lynch & Co. Inc. units and a series of related subsidiaries were cut to “A-” from “A.”
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.
There are a series of proposals, mostly surrounding taxes and caps on size, leverage and presumably complexity. The first bullet point, a cap on size relative to GDP, is similar to the SAFE Banking Act, which failed in the 2010 Senate with 33 votes. They all sound like good ideas, though they received little-to-no GOP support during the debates.
Mike Konczal sorts through Huntsman plan to end To big to Fail. Wonky but worth a read.