According to the Wall Street Journal:
Moody’s Investors Service put ratings of big U.S. bank holding companies on watch for possible downgrade, citing a possible removal of extraordinary government support now that the industry is moving closer to formalizing plans for liquidating banks in crisis.
These biggest U.S. banks’ ratings have gotten a slight boost since the financial crisis erupted five years ago because of the extraordinary support the government extended to aid the financial system. More recently, regulators and lawmakers have worked with banks to come up with plans for their orderly liquidation in the event of another crisis.
Now that those plans are getting more firm, the government may withdraw its support and the holding company ratings could drop as a result, the ratings agencies said in separate announcements this week.
Moody’s said Thursday that a possible offset to the removal of government support is the reduction in the severity of losses for holding company creditors in the event of an orderly liquidation versus a bankruptcy.
The agency joins Standard & Poor’s Corp., which said earlier this week it was also reviewing the holding company ratings of Goldman Sachs, J.P. Morgan, Morgan Stanley and Wells Fargo,JP Morgan Chase,Bank of New York Mellon,State Street and Bank of America.
