S&P downgrades 6 biggest US banks

S&P downgraded Bank of America and five other big U.S. banks. / AP

Standard & Poor's ratings service has cut the ratings of the six largest U.S. bank holding companies by one notch. JP Morgan Chase went from A+ to A; Goldman Sachs, Bank of America, Morgan Stanley and Citigroup were downgraded from A to A-; and Wells Fargo was cut from AA- to A+. Among the eight largest banks, only Boston-based State Street escaped unscathed.

The downgrades were part of more than 37 ratings of large global banks reviewed by the agency. S&P said that it had applied new standards to its methodology that focus on how institutions manage their businesses under market and economic stress. The new standards prompted a downgrade of 15 banks. Downgrades often raise the cost of borrowing for companies, as investors demand a higher interest rate to compensate them for additional risk.

The downgrade could be especially painful for Bank of America, which has dropped over 60 percent this year and remains mired under a cloud of legal issues associated with its ill-fated purchase of Countrywide. In a regulatory filing, the bank said that a downgrade of one level would necessitate the posting of $5.1 billion of additional funds.

Banks are learning the hard way that the easy money has already been made -- no more playing with the Fed's money and booking the profits. Now they need to figure out how to right-size their business models to match a slow growth economy. Masters of the universe are mere mortals after all.

Here's how each company's stock closed before the downgrade:

-- Bank of America (BAC): $5.07 (new 52-week low)

-- Citigroup (C): $25.24

-- Goldman Sachs (GS): $88.81

-- Morgan Stanley (MS): $13.31

-- Wells Fargo (WFC): $24.08

[bajajohn1]

All of the downgrades have occurred because the reality on the street is that banks have lost the confidence of the American people. All of them are considered corrupt.

[noloyalisti]

These bankster houses are not only too big to fail, they are too big to exist. We the 99% should immediately take them over and seize their assets. The sick evil Banksters conspired to ruin the economy and are just sucking us dry. We can't put up with this ridiculous 1% situation any longer. It is getting to the point of bypassing the government they own to make sure we get rid of these people.

[LaSola]

Article FAILS to mention 2 major Chinese Banks were UPGRADED!!!!

[anonoped]

How come star chambers are not being created to correct these atrocities on the American populace?

google star chamber.

[the0racle]

Hey, Citigroup, how's that Plutonomy workin' out for ya now?

[zorbaka]

they will recover.
http://www.cbsnews.com/stories/2003/11/19/opinion/meyer/main584424.shtml?tag=mncol;lst;1

[gjjemhunter]

too late. like the FDA working with the giant food corporations to deceive us, the Ratings companies have proven themselves untrustworthy co-conspirators in creating an illusion of low risk investments. A- really? Giving these banks a B- rating 10 years ago would have been accurate.

[lasvegasteacher]

Goldman Sachs, Bank of America, Morgan Stanley, Citigroup and Wells Fargo are getting their just deserts thanks to the Obama administration.