{"id":2001875,"date":"2023-08-15T21:08:02","date_gmt":"2023-08-16T01:08:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fitch-warns-it-might-downgrade-dozens-of-us-banks-after-slashing-americas-credit-rating\/"},"modified":"2023-08-15T21:11:33","modified_gmt":"2023-08-16T01:11:33","slug":"fitch-warns-it-might-downgrade-dozens-of-us-banks-after-slashing-americas-credit-rating","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fitch-warns-it-might-downgrade-dozens-of-us-banks-after-slashing-americas-credit-rating\/","title":{"rendered":"Fitch may downgrade many US banks after cutting America&#8217;s credit rating."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ffitch-warns-it-might-downgrade-dozens-of-us-banks-after-slashing-americas-credit-rating%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2001875&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><h2>Fitch Warns \u2064of Potential Downgrades for American Banks<\/h2>\n<p>A senior analyst\u2063 at Fitch warned\u200d on Tuesday that the\u2062 credit rating agency \u2062may be \u200bforced to slap dozens \u200dof American banks \u2062with downgrades amid ongoing woes in the \u2063U.S. banking industry.<\/p>\n<p>Chris Wolfe, head of North American banks at\u200d Fitch Ratings, told CNBC in an interview that if the rating agency reduces \u2063its score\u200d for the overall operating environment of U.S. banks by another notch\u2014from AA- to \u200bA+\u2014this would force a series of downgrades of individual banks.<\/p>\n<p>\u201cIf we were to move it to A+, then that would recalibrate all our financial measures\u200b and would probably translate into negative rating actions,\u201d Mr. Wolfe told the outlet.<\/p>\n<blockquote>\n<h3>Related Stories<\/h3>\n<ul>\n<li><a href=\"http:\/\/www.theepochtimes.com\/article\/out-of-control-government-borrowing-justifies-fitchs-us-rating-downgrade-blackstone-ceo-5445064\">Out-of-Control Government Borrowing Justifies Fitch&#8217;s US Rating Downgrade: Blackstone\u200c CEO<\/a> (8\/4\/2023)<\/li>\n<li><a href=\"http:\/\/www.theepochtimes.com\/us\/manchin-blames-biden-congress-for-historic-failure-of-fitch-downgrading-us-credit-rating-5442196\">Manchin Blames Biden, Congress for &#8216;Historic Failure&#8217; of Fitch Downgrading US \u2063Credit Rating<\/a> (8\/3\/2023)<\/li>\n<li><a href=\"http:\/\/www.theepochtimes.com\/epochtv\/fitch-downgrading-us-credit-rating-wont-have-lasting-impact-analysis-5441799\">Fitch Downgrading US Credit Rating Won&#8217;t Have Lasting Impact: Analysis<\/a> (8\/3\/2023)<\/li>\n<\/ul>\n<\/blockquote>\n<p>Mr. Wolfe&#8217;s warning follows\u2063 a move by Fitch in June to lower the score for the overall operating environment\u200d of U.S. banks from AA to AA-\u200b due to downward pressure on the sovereign credit rating of the \u2063United States, as well as\u200c shortcomings\u2063 in the\u2064 regulatory framework and uncertainty around the Federal Reserve&#8217;s rate hikes.<\/p>\n<p>&#8220;Interest\u200d rates have begun to reverse a long-run decline since the early 1980s, and banks will be operating in an environment of higher rates for an extended period, pressuring deposit levels and increasing funding costs,&#8221; Fitch said in a June 27 statement, elaborating on\u2062 its &#8220;structural\u200b challenges&#8221; rationale\u2064 for slashing the score.<\/p>\n<p>At the time, Fitch said it did\u200c not\u2063 expect the reduced operating environment score to have a negative \u200bimpact on the ratings\u200b of U.S. banks, although it \u2062did warn that it reduced the &#8220;ratings headroom.&#8221;<\/p>\n<p>Fitch said that, in principle, a one-notch downgrade in the banking industry score doesn&#8217;t necessarily result\u200b in bank issuer rating cuts.\u2064 However, it did\u2064 warn that a multi-notch \u200ddowngrade would, all\u200d else being equal, lead to lower financial profile scores.<\/p>\n<p>Mr. Wolfe&#8217;s remarks \u2062to CNBC make\u2064 clear that \u2062Fitch is getting closer to another industry \u2063downgrade and that this would trigger rating cuts for individual banks.<\/p>\n<p>Since individual banks can&#8217;t be rated higher than their operating environment, the move would mean that the \u200dnation&#8217;s\u2064 two biggest \u200cbanks, JPMorgan and Bank\u2064 of America, would \u200blikely get cut from their current AA-\u200c down to A+.<\/p>\n<p>The Fitch analyst&#8217;s \u200cremarks come as rating \u2063agency Moody&#8217;s cut the ratings of several small-to mid-sized banks and said there \u200ccould be more cuts \u200cin the pipeline.<\/p>\n<p>Financial stocks fell following the Fitch\u200c ratings\u2062 action \u200bthreat, with JPMorgan shares falling around 2 percent and\u2063 Bank of America dipping around 3 percent.<\/p>\n<h2>Fitch Downgrades \u2062US<\/h2>\n<p>Mr. Wolfe&#8217;s warning \u200bcomes not long after Fitch moved to slash America&#8217;s long-term \u2064credit rating\u2062 from AAA to AA+ at the beginning of August.<\/p>\n<p>In justifying its U.S. sovereign downgrade decision,\u200c Fitch said \u2063there has been a steady deterioration in governance standards in the United States over the past two decades, including on issues of government spending and debt servicing.<\/p>\n<p>&#8220;The \u200b<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bizarre-biden-team-blames-trump-for-downgrade-of-us-credit-rating\/\" title=\"'Bizarre': Biden Team Blames Trump for US Credit Rating Downgrade\">repeated \u200ddebt-limit political standoffs<\/a> and last-minute resolutions have eroded confidence\u2062 in \u200dfiscal management,&#8221; Fitch stated.<\/p>\n<p>&#8220;In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting\u200c process.&#8221;<\/p>\n<p>With the loss of its top sovereign \u2062credit rating, the United States\u200b has fallen behind\u2064 Germany, Denmark, the Netherlands, Sweden, \u200bNorway, Switzerland, Singapore, Luxembourg, and Australia.<\/p>\n<p>Treasury Secretary Janet Yellen has called\u2064 the downgrade &#8220;entirely unwarranted,&#8221; while the\u2064 White House said it &#8220;strongly&#8221; disagrees with \u200dFitch&#8217;s decision.<\/p>\n<p>This was the second time in history the country&#8217;s AAA rating\u2062 has been \u200cdowngraded.<\/p>\n<div>\n<figure style=\"width:640px\" class=\"alignnone\"><figcaption>Treasury Secretary Janet Yellen speaks during a \u200cpress conference at the U.S. Embassy in \u200cBeijing, on July 9, 2023. (Mark Schiefelbein\/AP Photo)<\/figcaption><\/figure>\n<\/div>\n<h2>Blame Game<\/h2>\n<p>Despite Fitch&#8217;s concerns over\u2063 &#8220;fiscal deterioration&#8221; and other factors, the White House has blamed\u2062 former president Donald Trump and House Republicans for the downgrade.<\/p>\n<p>Republicans have pushed back on this assertion, while expert reactions have been\u2064 mixed.<\/p>\n<p>Blackstone CEO Steve Schwarzman, for example, said\u200d that the downgrade was regrettable but justified, in large measure due\u200b to the out-of<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/republicans-ask-for-spending-cuts-as-congress-prepares-for-debt-ceiling-battle\/\" title=\"Republicans Ask For Spending Cuts As Congress Prepares For Debt Ceiling Battle\">-control government spending<\/a> that\u200c keeps adding to the federal\u2064 debt load.<\/p>\n<p>\u201cThe numbers justify\u200c it, \u200dregrettably,\u201d Mr. Schwarzman told\u200c CNBC \u200cin a <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fitch-warns-it-might-downgrade-dozens-of-us-banks-after-slashing-americas-credit-rating\/\" title=\"Fitch may downgrade many US banks after cutting America's credit rating.\">wide-ranging\u200b interview earlier<\/a> this \u2063month. \u201cWe\u2019ve had\u2063 an explosion of \u2062debt since the \u2063global financial crisis. We don\u2019t appear to have a lot of discipline.\u201d<\/p>\n<div>\n<figure style=\"width:1024px\" class=\"alignnone\"><figcaption>Steve Schwarzman, CEO of the Blackstone Group, participates in a Business\u2063 Roundtable discussion in Washington, on\u2063 Dec. 6, 2018. (Mark\u200d Wilson\/Getty Images)<\/figcaption><\/figure>\n<\/div>\n<p>Mohamed El-Erian,\u2062 <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fncs-hilton-biden-presidency-dead-this-is-an-ex-presidency\/\" title=\"FNC's Hilton: Biden Presidency 'Dead' -- 'This Is an Ex-Presidency'\">chief economic adviser<\/a> to financial services company Allianz SE, \u2062took to X (formerly Twitter) to express his viewpoint on what he described as a &#8220;strange move.&#8221;<\/p>\n<p>\u201cI am very puzzled by many aspects of this announcement, as well as by the \u200ctiming,\u201d\u2063 Mr. El-Erian wrote. \u201cOverall, this announcement is much more likely to \u2062be dismissed than have a \u200clasting disruptive impact on \u200bthe U.S. economy and markets.\u201d<\/p>\n<p>JPMorgan Chase\u2064 CEO Jamie Dimon told\u2062 CNBC he thought the \u200bcredit drop was &#8220;ridiculous,&#8221; yet mostly inconsequential\u2063 as\u200d financial markets, rather than rating agencies, determine borrowing\u200c costs, and that, in his view, \u2063investors remain confident in the ability of the United States\u200b to \u2063service its debts.<\/p>\n<p>On the political front, Kevin Munoz, President Joe Biden&#8217;s reelection campaign spokesperson, said in a statement on\u200c Aug. 2 that this was a &#8220;Trump downgrade&#8221;\u200d and &#8220;a direct result \u200bof an extreme MAGA Republican agenda&#8221; that is &#8220;defined by \u200bchaos, \u2063callousness, and recklessness.&#8221;<\/p>\n<p>Jared Bernstein, \u2062chair of President Biden&#8217;s Council \u200dof Economic Advisers, alluded to the &#8220;cognitive dissonance&#8221; he endured when learning about the &#8220;bizarre&#8221; downgrade that &#8220;made\u2062 no sense&#8221; because of the success of \u2064&#8221;Bidenomics.&#8221;<\/p>\n<div>\n<figure style=\"width:600px\" class=\"alignnone\"><figcaption>Council of Economic Advisers member Jared Bernstein speaks at a press\u2064 briefing at the \u2062White House on July 18, 2022. (Andrew Harnik\/AP Photo)<\/figcaption><\/figure>\n<\/div>\n<p>Senate majority leader Chuck Schumer (D-N.Y.) pinned the blame on House Republicans.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>American banks, it could result in downgrades for many of them. Wolfe, a senior analyst at Fitch, expressed concerns about the ongoing troubles in the U.S. banking sector. He stated that the agency may have no choice but to downgrade numerous American banks due to these issues.<\/p>\n","protected":false},"author":118,"featured_media":2001876,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2001875","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2001875","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/118"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2001875"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2001875\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2001876"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2001875"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2001875"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2001875"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}