From the FINANCIAL TIMES:
Bank of America has been the hardest hit among US banks downgraded by Moody’s, which warned that regulatory reforms made it less likely that the government would step in to bail out creditors when a large bank failed.
The Moody’s downgrade on Wednesday to banks’ credit ratings is good news for the Federal Deposit Insurance Corp, which has argued there is no basis for rating agencies to include in their models a premium for banks considered “too big to fail”. The FDIC says new powers granted by the Dodd-Frank Act last year allow the government to wind down safely any financial group, imposing losses on creditors in the process.
As well as BofA, Citigroup and Wells Fargo also saw their debt downgraded. However, BofA, which is struggling to emerge from an avalanche of mortgage-related losses and litigation, was worst affected; its stock fell 52 cents, or 7.5 per cent, to $6.38, below the level that Warren Buffett’s Berkshire Hathaway infused $5bn of new capital last month…
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