Largest banks face potential rating cuts

Bloomberg

JPMorgan, the largest U.S. bank by market value, had its ratings outlook cut by Moody’s to negative from stable. Moody’s said it will review the long-term debt ratings of Wells Fargo, the second-largest U.S. bank, and Bank of America, ranked third, on concern that higher credit costs may damage capital ratios. The U.S. economy "deteriorated further" in almost all corners of the nation in the past two months as consumer spending slumped and manufacturing declined, the Federal Reserve said in its regional business survey this week. Ten of 12 Fed district banks reported worsening conditions in their regional economies and respondents did not expect a "significant pickup" until late 2009 or early 2010.

"This is pulling them in line with their peers," Jeffery Harte, a banking analyst at Sandler O’Neill & Partners in Chicago, said of Moody’s new outlook on JPMorgan.