FINANCIAL TIMES: Moody’s has cut the credit ratings of big US banks including Morgan Stanley, Goldman Sachs and JPMorgan Chase, after deciding that the federal government is less likely to bail the financial institutions out if they get into future difficulties…
Wall Street reforms under the Dodd-Frank Act forbid the use of taxpayer money to save a failing bank and require the creation of a resolution authority to wind down institutions once they get into trouble, imposing losses on creditors in the process.
“We believe that US bank regulators have made substantive progress in establishing a credible framework to resolve a large, failing bank,” said Robert Young at Moody’s. “Rather than relying on public funds to bailout one of these institutions, we expect that bank holding company creditors will be bailed-in and thereby shoulder much of the burden to help recapitalise a failing bank.” … (more)
