Ratings firm downgrades three banks
Moody’s Corp. cut the debt ratings of Bank of America, Wells Fargo and Citigroup yesterday, saying the U.S. government is getting less comfortable with bailing out large troubled lenders.
The government is “more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled,” the ratings agency said.
Moody’s decision hit Bank of America hardest as it cut both the long-term and short-term debt of the holding company and long-term deposits at its lead bank. The ratings agency cut only the short-term debt of Citigroup and limited the Wells’ cut to its senior debt and to deposits at its lead bank.
Bank of America, the second-largest U.S. bank company, is struggling with billions of dollars of mortgage losses, litigation and stresses from the need to raise capital to meet new regulatory obligations.