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September 22, 2011 at 09:42 AM
Moody’s Investors Service cut the ratings of three American banks late Wednesday, saying it was now less likely the government would bail them out if they were found to be in financial difficulty.
Bank of America, Wells Fargo and Citigroup all saw their credit ratings lowered by varying degrees, and analysts reacted with disapproval. Advisors may not be too happy, either, if they are tied to one of the three.
Bloomberg reported that the ratings agency lowered the senior debt rating of Bank of America, the biggest lender in the U.S. by assets, two levels to Baa1 from A2. Long-term senior ratings were kept at negative, indicating that Moody’s may contemplate another cut. Short-term debt for the bank was cut from Prime 1 to Prime 2.
Wells Fargo’s senior debt went down a notch from A1 to A2, with its senior long-term ratings kept at negative.
Citigroup’s short-term ratings went from Prime 1 to Prime 2, but the agency confirmed its long-term rating of A3 and Citibank NA’s A1 long-term and Prime 1 short-term ratings. In a statement, Moody’s said that it was “more likely now than during the financial crisis” that the government would allow a big bank to fail.
Attorney Patrick J. Burns (left), who leads his own firm and specializes in helping advisors who are going independent, said in an e-mail statement that the ratings cut might be another push for wirehouse advisors who are considering heading out on their own, coming as it does on top of news last week that UBS lost some $2.3 billion to a rogue trader.