Moody’s cuts debt ratings for Bank of America, Wells Fargo and Citi

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NEW YORK — Moody’s Investors Service has lowered some of the debt ratings for Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., saying it is now less likely that the U.S. government would step in and prevent the lenders from failing in a crisis.

The ratings firm said Wednesday that it believes the government is likely to provide some level of support for financial institutions, but is also more likely now than during the 2008 financial crisis to allow a large bank to fail should it become financially troubled.

Moody’s downgraded long-term debt ratings for Bank of America and Wells Fargo Bank N.A., and cut BofA’s short-term rating and Bank of America N.A.’s long-term deposit rating.

The firm confirmed Citigroup’s long-term rating, but downgraded its short-term rating.

Bank of America in a statement said Moody’s downgrade was based on factors outside the bank’s control: The ratings agency’s determination that the government would be less likely to support large financial institutions in a crisis and a possible further decline in the econonmy.

“In terms of factors within the control of Bank of America, Moody’s states clearly that we have made significant progress in improving our capital and liquidity positions, shedding legacy and noncore assets, and managing risk,” the bank said.

“With regard to the mortgage business, Moody’s concludes that we have ample resources to absorb the additional losses we are likely to experience on these exposures.

“While we disagree with their conclusions and we believe our ratings should be higher, to minimize any potential impact of this decision on our business, we have been managing our liquidity carefully and we have prefunded our planned borrowing needs for the year,” the bank added.

Wells Fargo said the downgrade was consistent with statements Moody’s has made as far back as a year and a half ago and noted that the bank’s short-term and other ratings weren’t part of the review.

Citigroup said it was pleased Moody’s affirmed both the long-term and short-term ratings of its banking unit and the long-term rating of Citigroup, but that it disagreed with the change to Citigroup’s short-term rating.

“It does not accurately reflect the significant progress Citi has made since Moody’s last rated Citi more than two-and-a-half years ago,” Citi said.