Banks get a downgrade from Moody's. Here are the 10 lenders impacted. (2024)

FAQs

Why did Moody's downgrade banks? ›

The downgrade reflects Moody's views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense, the risk and audit functions of the bank, at a pivotal time.

Impact on Borrowing Costs: Typically, a downgrade translates in higher borrowing costs for the impacted banks. Because credit ratings affect loan interest rates, a lower rating indicates that banks may need to provide higher interest rates to attract investors, thereby affecting their profitability.

When credit rating agencies lower the rating of any issuer, it is said to be a rating downgrade. 2. A downgrade indicates a higher risk of default as the issuer's ability to make scheduled interest or principal payments becomes questionable.

Moody's Investors Service, a credit rating agency, downgraded Lancaster city-headquartered Fulton Bank and nine other mid-sized banks this week over concerns related to higher interest rates and rising risks related to commercial real estate exposure.

Republic First Bank reported unrealized securities losses in excess of its equity as early as June 2022. State regulators closed Republic First Bank in April 2024, marking the first bank failure of the year.

Bottom line. For the most part, if you keep your money at an institution that's FDIC-insured, your money is safe — at least up to $250,000 in accounts at the failing institution. You're guaranteed that $250,000, and if the bank is acquired, even amounts over the limit may be smoothly transferred to the new bank.

About Recessions and Ensuring Deposit Insurance

If the United States were to enter a recession, the funds you have saved at a bank aren't at risk of becoming lost or inaccessible the same way they were during the Great Depression.

If your bank fails, up to $250,000 of deposited money (per person, per account ownership type) is protected by the FDIC. When banks fail, the most common outcome is that another bank takes over the assets and your accounts are simply transferred over. If not, the FDIC will pay you out.

Fitch Affirms the United States at 'AA+'; Outlook Stable. Fitch Ratings - New York - 01 Mar 2024: Fitch Ratings has affirmed the United States of America's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'AA+' with a Stable Outlook.

Is BBB credit rating bad? ›

'BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

Usually, to change credit cards, you need to cancel your old card and apply for a new one. Both of those actions can impact your credit score. When you downgrade a credit card, however, your credit is not affected. Card issuers only let you downgrade to credit cards in the same product line.

CFPB Orders U.S. Bank to Pay $21 Million for Illegal Conduct During COVID-19 Pandemic. WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today ordered U.S. Bank to pay nearly $21 million for keeping out-of-work consumers from accessing unemployment benefits at the height of the COVID-19 pandemic.

Moody's said the rating action reflects several sources of strain on the US banking sector: funding pressures, regulatory capital weaknesses and rising risks associated with commercial real estate exposures.

Inflation, recessions, and housing market crashes can all cause banks to shut down. Regulation: The government provides many regulations that banks must follow, especially after the 2008 recession. Specifically, the FDIC protects individuals against losing their deposits if an insured bank fails.

NEW YORK/WASHINGTON, Nov 10 (Reuters) - Moody's on Friday lowered its outlook on the U.S. credit rating to "negative" from "stable" citing large fiscal deficits and a decline in debt affordability, a move that drew immediate criticism from President Joe Biden's administration.

Ratings giant Moody's has warned of more pain ahead for the US banking system after a run on deposits led to the collapse of Silicon Valley Bank. Moody's cut its outlook for the sector to "negative" from stable, warning of "a rapid deterioration in the operating environment".

Many smaller banks, such as this one in Haverhill, Iowa, lacked sufficient reserves to stay in business and became no more than convenient billboards. Many of the small banks had lent large portions of their assets for stock market speculation and were virtually put out of business overnight when the market crashed.