Moody’s downgrades BofA, JPMorgan, Wells Fargo, other big banks after U.S. credit cut

Moody’s Ratings on Monday downgraded the deposit ratings at some units of megabanks JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC), owing to the bond grader’s recent cut to the U.S. sovereign rating.

The lenders were cut by one notch to Aa2 from Aa1, according to a statement. That’s the third-highest mark in Moody’s ratings spectrum.

Moody’s also cut the long-term senior unsecured debt ratings and issuer ratings for certain rated subsidiaries and branches of Bank of America (NYSE:BAC) and BNY (NYSE:BK), to Aa2 from Aa1.

In addition, the long-term counterparty risk ratings for certain rated subsidiaries and branches of BofA (NYSE:BAC), BNY (NYSE:BK), JPMorgan (NYSE:JPM), State Street (NYSE:STT) and Wells Fargo (NYSE:WFC) were downgraded to Aa2 from Aa1. And the long-term counterparty risk assessments for the rated subsidiaries and branches of BAC, JPM and WFC were lowered to Aa2(“cr”) from Aa1(“cr”).

The move follows Moody’s downgrade of the U.S. government’s long-term issuer and senior unsecured ratings to Aa1 from Aaa (the highest possible rating), due to a combination of skyrocketing debt and high interest payment ratios.

“The downgrade of the US Government’s rating indicates that its ability to support the US’s global systemically important banks (G-SIBs) has weakened,” Moody’s said.

In Monday midafternoon trading, JPM slipped 0.9%, WFC edged down 0.4%, BK dipped 0.5%, STT was little changed and BAC inched up 0.1%,