bank run blog

Just as the some of the nation’s largest and most coddled banks step up to ostentatiously “repay” a tiny fraction of the money that the Treasury and Federal Reserve have funneled to them through a purposely bewildering variety of mechanisms since August 2007, the ratings agencies have discovered similar widespread insolvency at the regional and super regional level. According to Reuters :

“Standard & Poor’s on Wednesday cut its ratings on 18 banks citing expectations of more difficult operating conditions due to volatile financial markets and tighter regulation.

Among the rating changes, S&P cut the counterparty credit ratings of Wells Fargo & Co by one notch to AA-minus, U.S. Bancorp by two notches to A-plus and Fifth Third Bancorp by two notches to BBB.

S&P also downgraded the counterparty credit ratings of Huntington Bancshares and Carolina First Bank by two notches to junk-status BB-plus with a negative outlook. It also cut Citizens Republic Bancorp counterparty credit rating by three notches to BB-minus with a negative outlook.”

The Associated Press reports that S&P analysts predict “permanent repercussions” still to come from the banking crisis that so many believe is over :

“Widescale changes to the industry because of the credit crisis and ongoing recession will dramatically alter the banking landscape, S&P credit analyst Rodrigo Quintanilla said in a release.

‘We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions,’ Quintanilla said. ‘Financial institutions are now shedding balance-sheet risk and altering funding profiles and strategies for the marketplace’s new reality. Such a transition period justifies lower ratings as industry players implement changes.’”

Reuters : S&P cuts credit ratings on 18 US banks

Associated Press : Standard & Poor’s cuts ratings on 18 banks

Bloomberg : U.S. Stocks Fall, Led by Banks on Downgrade; Health Shares Gain