The stock is down 24 cents at $6.66.
Bank of America, Wells Fargo: The Downgrade Shoe Finally Drops
For a long, long time now, investors have been waiting for the day when credit-rating agencies cut their ratings on the big banks due to the possibility that they might get less support from the US government. That day has come.
Moody’s has downgraded Bank of America’s long-term credit rating two notches to “Baa1″ from “A2″ and its short-term rating to P-2 from P-1.
Baa1 is equivalent to BBB in other rating scales, which is just about the average credit rating for corporate bonds.
And this is not an unexpected development. Still, it’s not welcome and could lead to higher borrowing costs. Bank of America stock is down about 3% at last check to $6.69. Update: It’s now down 4.5% at $6.58.
This could have other Too Big to Fail Banks looking over their shoulders, too. They’ve also been warned in the past of the potential for a downgrade. The XLF is down 2%....MORE
Is that Cramer under there?
Here's his September 13 Lightning Round comment:
"...there could be as much as $30 billion in legal exposure... they are reserved for a lot of that when you take the Buffett money and the sale from the Chinese bank... the litigation risk is not as bad as people think. The earnings risk is different... when people are cutting JPMorgan's earnings estimates, BAC is not going to make a lot of money. They are going to make money, though... It has done nothing, it has been a loser. I think it was bottoming when Warren Buffett bought it, and here, I think it is bottoming."The stock had closed that day at $7.00. Look for him to mention it a couple times in the next day or so.
I swear that's Cramer.
Anyhoo, in another part of the empire Dow Jones Newswire says:
Moody's Downgrades Bank Of America On Less Probability Of US Support
While Bloomberg focuses on the credit default swaps:
Bank of America Credit Swaps Soar, Bonds Fall after Moody’s Cut