Wednesday, 28 July 2010 08:36

BofA, Citi, Wells Fargo - All Members of the Doo Doo 32, Get a Negative Watch from Moody's

From CNBC: BofA, Citi, Wells Fargo Outlook Negative: Moody's

Moody's on Tuesday changed its outlook on Bank of America, Citigroup and Wells Fargo to negative, from stable, citing lessened government support for the institutions under new U.S. regulations.

A negative outlook indicates the banks are more likely to be downgraded over the next 12 to 18 months. The credit ratings agency also said it may cut its ratings on ten regional banks on reduced government support.

Moody's has boosted its debt and bank deposit ratings on large financial institutions by between 3 and 5 notches since early 2009 on the assumption that they would receive government support in a time of trouble because of the risks they pose to other financial firms and the economy as a whole.

The new financial reform bill, however, is intended "clearly to eliminate government—i.e. taxpayer-support to creditors," Moody's said. Some support, however, is likely to remain for large institutions as regulators work to implement new laws, it added.

"Over the next 12 to 24 months ... we expect that our support assumptions for systemically important banks will likely revert to pre-crisis, or even lower, levels—though we do not anticipate that we would completely eliminate support from these firms' senior debt and deposit ratings," Moody's said.

...

Moody's also said it may downgrade subsidiaries of BB&T, Capital One, Fifth Third, KeyCorp, PNC, Popular, Regions Financial, SunTrust Banks, U.S. Bancorp and Zions Bancorp.

Take note that all of these banks were on the (or were too weak to even make it on the) original Doo Doo 32 list back in 2008 and the Doo Doo 32, Revisited about a year ago.. Several of these banks were also called out as potential shorts in about 60 days ago in The BoomBustBlog Pan-European Sovereign Debt Crisis Bankruptcy Search:  a review the financial and bank holding companies whose economic and financial outlook do not support their current valuations.

Readers, remember Reggie Middleton on Suntrust’s Q3-09 Earnings?

Subscribers, see WFC Research Note Sep 2009 WFC Research Note Sep 2009 2009-09-30 13:01:30 281.29 Kb, ~ WFC Off Balance Sheet Exposure WFC Off Balance Sheet Exposure 2009-10-19 04:25:53 258.77 Kb ~ WFC Investment Note 22 May 09 - Retail WFC Investment Note 22 May 09 – Retail 2009-05-27 01:55:50 554.15 Kb ~ WFC Investment Note 22 May 09 - Pro WFC Investment Note 22 May 09 – Pro 2009-05-27 01:56:54 853.53 Kb ~ Wells Fargo ABS Inventory Wells Fargo ABS Inventory 2008-08-30 06:40:27 798.22 Kb to expound on our opinions of Wells Fargo, below.

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Subscribers can also access several PNC and Sun Trust forensic reports in the bank section via the subscription contents link.

Last modified on Wednesday, 28 July 2010 08:36
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