Moody’s Investor Services Slashes Credit Ratings On 15 Major Banks
As further proof of the continuing global economic and financial crisis, Moody’s cut the credit rating on fifteen major banks, including the most powerful investment bank in the world. The list included Goldman Sachs, JP Morgan Chase, Citigroup and Bank of America. The European Banks on Moody’s list included Deutsche Bank, HSBC and Barclays.
The Eurozone debt crisis, raging out of control, was clearly a factor in the Moody’s downgrade. However, volatility and exposure to weak econometrics in the U.S. and China, questionable risk management and the negative outlook for profitability of these banking institutions amid the continuing global economic crisis were also linked to the Moody’s downgrade. It should be recalled that since the crisis emerged, the ratings agencies have tended to be a lagging as opposed to a leading indicator of economic turmoil. It is likely that the financial risk to major banks is even worse than suggested by the most recent Mood’s downgrade.