Friday, June 22, 2012

Moody's Downgrades Too Big to Fail Banks (BAC, MS, CS, C, DB, RBS, GLE, HSBC, BNP, UBS, GS, ACA, JPM, BCS, RBC)

Credit Suisse in NYC
Moody's downgraded a bunch of TBTF banks yesterday, which was expected given that Moody's put them all on review in February. But, as the SF Gate article pointed out, bank credit rating downgrades affect how counterparty and collateral risk is managed when dealing with OTC derivative contracts. The TBTF banks can't fail because they are on the other side of trillions of dollars of OTC derivatives that are supposed to be managing risk for large financial institutions, corporations, hedge funds, governments, and other TBTF banks globally.

  • Moody's downgrades firms with global capital markets operations (Moody's Press Release)
  • Key Drivers of Rating Actions on Firms with Global Capital Markets Operations (Moody's Special Comment)
  • Credit Suisse Cut 3 Levels as Moody's Downgrades Biggest Banks (Bloomberg at SFGate.com)
  • Moody's Downgrade Is Out - Morgan Stanley Cut Only 2 Notches, To Face $6.8 Billion In Collateral Calls (Zero Hedge)
  • Bank Investors Dismiss Moody’s Cuts As Years Too Late (Bloomberg)
  • Moody's Downgrade of Banks ‘Absurd,’ Says Dick Bove (CNBC) (!!)

Here are the downgrades in chart form.



Source: Moody's


Ha, and this article by Matt Taibbi came just at the right time.

"The Scam Wall Street Learned From the Mafia (RollingStone, 6/21/2012)

How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape"

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