{"id":18722,"date":"2023-03-14T22:08:23","date_gmt":"2023-03-14T22:08:23","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/moodys-downgrades-us-banking-sector-to-negative-after-collapse-of-three-major-banks-bitcoin-news\/"},"modified":"2023-03-14T22:08:23","modified_gmt":"2023-03-14T22:08:23","slug":"moodys-downgrades-us-banking-sector-to-negative-after-collapse-of-three-major-banks-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/moodys-downgrades-us-banking-sector-to-negative-after-collapse-of-three-major-banks-bitcoin-news\/","title":{"rendered":"Moody’s Downgrades US Banking Sector to Negative After Collapse of Three Major Banks \u2013 Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
\n<\/p>\n

\n
\n<\/header>\n
\n\n<\/div>\n

After the failure of three major U.S. banks last week, with two of them being the second and third largest banking failures in the country, Moody\u2019s Investors Service has downgraded the rating of the U.S. banking system from \u201cstable\u201d to \u201cnegative.\u201d As one of the \u201cBig Three\u201d credit rating firms, Moody\u2019s cited a \u201crapid deterioration in the operating environment\u201d following the collapse of these banks.<\/strong><\/p>\n

Moody\u2019s Downgrades U.S. Banks, Financial Institutions Face Rising Deposit Costs and Reduced Earnings<\/h2>\n

Moody\u2019s Investors Service, the American credit rating agency, has downgraded<\/a> the U.S. banking sector from \u201cstable\u201d to \u201cnegative.\u201d The agency cited<\/a> the collapse of three banks within seven days in the United States last week. Silvergate Bank decided<\/a> to voluntarily liquidate, and Silicon Valley Bank (SVB) experienced<\/a> a large bank run last Thursday.<\/p>\n

After the FDIC placed SVB into receivership, New York regulators revealed<\/a> that the FDIC also took over Signature Bank on Sunday. SVB\u2019s collapse was the second-largest banking failure since Washington Mutual (Wamu)<\/a> in 2008, and Signature\u2019s failure was the third-largest following SVB\u2019s.<\/p>\n

\u201cWe have changed to negative from stable our outlook on the U.S. banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY,\u201d Moody\u2019s detailed on Monday.<\/p>\n

The credit agency added that even though the U.S. government made depositors whole, \u201cthe rapid and substantial decline in bank depositor and investor confidence precipitating this action starkly highlight risks in U.S. banks\u2019 asset-liability management (ALM) exacerbated by rapidly rising interest rates.\u201d<\/p>\n

MIS analysts stated that while the U.S. Federal Reserve\u2019s backstopping liquidity facility for banks is beneficial and could help the situation, \u201cbanks with substantial unrealized securities losses and with non-retail and uninsured U.S. depositors may still be more sensitive to depositor competition or ultimate flight, with adverse effects on funding, liquidity, earnings, and capital.\u201d<\/p>\n

MIS is referring to the U.S. central bank\u2019s recently created<\/a> Bank Term Funding Program (BTFP), which was announced after Treasury secretary Janet Yellen<\/a> revealed that SVB and Signature would be bailed out.<\/a><\/p>\n

Moreover, while Goldman Sachs<\/a> and other market participants believe<\/a> Fed chair Jerome Powell<\/a> and the Federal Reserve<\/a> won\u2019t raise rates this month, Moody\u2019s thinks the central bank\u2019s monetary tightening process should proceed. \u201cOur base case is for the Fed\u2019s monetary tightening to continue, which could deepen some banks\u2019 challenges,\u201d the MIS report emphasized.<\/p>\n

\u201cWe expect pressures to persist and be exacerbated by ongoing monetary policy tightening, with interest rates likely to remain higher for longer until inflation returns to within the Fed\u2019s target range,\u201d Moody\u2019s said. The credit agency added that U.S. banks now face rising deposit costs, which will result in reduced earnings.<\/p>\n

\n
\nTags in this story
\n<\/h6>\n
asset-liability management<\/a>, backstopping liquidity facility<\/a>, Bank Term Funding Program<\/a>, banking failures<\/a>, base case<\/a>, capital<\/a>, Challenges<\/a>, credit rating agency<\/a>, deposit runs<\/a>, depositors<\/a>, Downgrade<\/a>, earnings<\/a>, FDIC<\/a>, Fed Chair<\/a>, Funding<\/a>, Goldman Sachs<\/a>, inflation<\/a>, interest rates<\/a>, investor confidence<\/a>, Investors Service<\/a>, Janet Yellen<\/a>, jerome powell<\/a>, Liquidity<\/a>, market participants<\/a>, Monetary Tightening<\/a>, Moody’s<\/a>, Moody’s Credit<\/a>, pressures<\/a>, receivership<\/a>, reduced earnings<\/a>, rising deposit costs<\/a>, Signature Bank<\/a>, Silicon Valley Bank<\/a>, Silvergate Bank<\/a>, Treasury Secretary<\/a>, U.S banks<\/a>, U.S. banking system<\/a>, U.S. Federal Reserve<\/a>, Washington Mutual<\/a><\/div>\n<\/div>\n

What do you think the impact of the downgrading of the U.S. banking system by Moody\u2019s will be on the economy? Share your thoughts in the comments section below.<\/strong><\/em><\/p>\n

\n
\n\n<\/div>\n
\n
\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

\n
\n
\n<\/a>
\n<\/span>\n<\/p>\n<\/div>\n<\/div>\n

Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons, Daniel J. Macy \/ Shutterstock.com<\/em><\/p>\n

\n

Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

\n