Moody's downgrades 15 major banks
A Barclays employee under an umbrella in London, England. Fifteen of the world's biggest banks have been downgraded by Moody's, but does that mean trouble for Europe, or the whole world.
Jeremy Hobson: After U.S. markets closed yesterday came another one of those dreaded moments for the world's largest banks. The credit rating agency Moody's slashed the ratings of 15 of the world's biggest financial institutions, including Citigroup and Bank of America here in the U.S. and Barclays and Credit Suisse in Europe.
Marketplace's Stephen Beard has more now from London.
Stephen Beard: Fifteen Titans of the financial world have been humbled -- Goldman Sachs, Morgan Stanley and Deutsche Bank among them. They've had their credit ratings cut by between one and three notches. This will make it more expensive for them to borrow. Moody's says these 15 banks have been downgraded because they're all heavily involved in financial markets; they risk big losses as these markets have become more volatile.
Ralph Silva of SRN Consulting says these markets are volatile because the global economy looks more fragile. He says the downgrades are a vote of no-confidence in recovery.
Ralph Silva: What we're really seeing here is an indication that there is no expectation of economic recovery between here and the end of the year. As a result the banks -- who are directly linked to the economy right now -- will probably suffer as well.
Some analysts say the downgrades could make matters worse. These banks may now have to beef up their capital. And that could mean lending less to households and businesses.
In London, I'm Stephen Beard for Marketplace.