Monday, August 8, 2011

"S&P Spares the Banks From Downgrade" (BAC; C; JPM; WFC)

The rater is only talking about the situation we linked to in yesterday's "The Last Transmission of a Spanish Market Observer (and will JP Morgan be downgraded?) JPM USAA+":
...Will France retain its AAA?
Will JP Morgan be downgraded?
Here's a snip from Pragmatic Capitalism:

 ...In a comment Friday Niels Jensen of Absolute Return Partners stopped in to provide his perspective of the downgrade.  He said:
“I suspect you are all missing the bigger picture. The downgrade of US sovereign is NOT irrelevant because it will force S&P to (a) downgrade JP Morgan (as the sovereign stands behind the banking system, you cannot have a bank rated higher than the sovereign), and (b) downgrade several European sovereigns, most notably France. Once France get downgraded, several French banks will get downgraded. It will then spread to other countries, and we have the potential for another crisis, so don’t underestimate the significance of this.”
Downgrades for other reasons are definitely possible.
Here's the scoopage via MarketBeat:
Credit rating firm Standard & Poor’s said Monday that its downgrade of the U.S. government’s credit rating last week won’t impact the credit of U.S. banks.

The notice came minutes before the close of a bloody market that hit financial stocks particularly hard. Bank of America, the nation’s largest bank, fell more than 20%, Citigroup fell more than 16%, and J.P. Morgan Chase slid almost 10%.

S&P said in a press release, “None of the banks we rate in the U.S. has an issuer credit rating higher than the U.S. sovereign rating. The sovereign downgrade does not alter the government support assumptions that we factor into our ratings on four banks.”...MORE