Bank of America and Wells Fargo could see their debt ratings lowered by a major rating agency.
Moody’s Investors Service said it might downgrade the ratings of the two corporations, as well as Citigroup, citing concerns that the U.S. government might not continue to support large banks to the extent that is has been in the economic downturn.
“Each of these ratings currently incorporates an unusual amount of ‘uplift’ from Moody’s systemic support assumptions that were increased during the financial crisis,” Moody’s said. “The review will focus on whether these ratings should be adjusted to remove this unusual uplift and include only precrisis levels of government support.”
Moody’s said it is reviewing the debt ratings in light of the Dodd-Frank financial reform law.
“The unusual levels of uplift incorporated into the ratings of Bank of America, Citigroup, Wells Fargo may no longer be appropriate,” Moody’s said.
Bank of America is based in Charlotte, Wells Fargo in San Francisco and Citigroup in New York.