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Moody’s downgraded the credit ratings of JPMorgan Chase & Co, Bank of America Corp, and Wells Fargo & Co on Friday. This came after the agency cut the U.S. credit rating earlier in the day. The banks’ ratings were lowered due to increased risks from the fiscal challenges facing the United States.
Moody’s cited this as the main reason for the downgrades. The impact was felt in the financial markets. Major stock indexes eased and longer-dated U.S. Treasury yields inched higher.
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Investors are watching closely as Congress debates a bill that includes big tax cuts.
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moody’s downgrades major US banks
Moody’s decision shows worries about how major financial institutions could be hurt by economic uncertainty and changes in fiscal policy.
“The downgrades of the banks reflect Moody’s view that their creditworthiness is directly linked to that of the U.S. government,” the agency said in a statement. JPMorgan Chase & Co’s long-term senior unsecured debt rating was cut to Aa2 from Aa1. Bank of America Corp and Wells Fargo & Co saw their ratings lowered to Aa3 from Aa2.
The banks did not immediately respond to requests for comment on the downgrades. Moody’s action underscores the interconnectedness of the U.S. financial system and the broader economy. It also highlights the potential ripple effects of shifts in government fiscal policy.
As policymakers continue to grapple with budget deficits and the national debt, the implications for the banking sector and the wider economy remain a key focus for investors and analysts alike.