Friday, June 3, 2011

US risks credit downgrade: Moody's

Source: Press TV

Moody's Investors Service has warned that it might review the US for a possible credit downgrade amid concerns about the current national debt crisis coming to more than USD 14.4 trillion.

Bank of America, Citigroup and Wells Fargo Co may be downgraded by Moody's, the provider of credit ratings and research covering debt instruments and securities, as the rating firm reviews whether the government will limit its support of the largest financial firms, AFP reported.

The banks' present ratings are based on "uplift from Moody's systemic support assumptions that were increased during the financial crisis," the ratings firm said in a statement on Thursday.

Lawmakers have overhauled regulations and passed the Dodd-Frank legislation to avoid a repeat of the bailouts that aided firms including Charlotte, North Carolina-based Bank of America, which received USD 45 billion in assistance.

"The US government's intent under Dodd-Frank is very clear," said Moody's senior vice-president Sean Jones.

"It does not want to bail out even large, systemically important banking groups."

The credit rating agency says it expects to place the US' rating under review if political parties do not cut a deal to increase the debt limit soon.

Democrats and Republicans have failed to reach an agreement on the issue so far.

Bank of America, Citigroup and San Francisco-based Wells Fargo have raised funds from private investors to repay US aid and have been building capital to guard against further declines in housing prices.

Paul Craig Roberts, former assistant Ssecretary to the US Treasury, told Press TV on Thursday, "The announcement by Moody's Investors Service is just a theater [performance] to help Wallstreet achieve its end of privatizing public pensions and public healthcare.”

"Because of the destruction of American manufacturing and the destruction of American unions, the Democratic party is dependent on the same funding sources as the Republicans. So we cannot rely on the Democrats to protect the elderly's pensions or healthcare from Wall Street," he added.

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