The credit rating agency, Moody’s, downgraded 15 of the world’s biggest banks on Thursday, citing concerns about the stability of the global financial system. After markets closed on Thursday, Moody’s cut the ratings of 15 financial institutions including Bank of America, Goldman Sachs, and JPMorgan Chase, which recently suffered a trading loss of $2 billion dollars.
In a statement, Moody’s Global Banking Managing Director Greg Bauer said, “All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities.” The review, which was announced in February, was incited by a “reassessment of the volatility and risks that creditors of firms with global capital markets operations face.” Moody’s cited risks that were “more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions.” The news comes as anxieties over Europe’s debt crisis continue, and the mayhem it could have on global markets. The downgrades could also raise costs for the banks, making it more expensive for them to obtain loans.
