Moody's Downgrade of Bank Debt Would Effect Commercial Loan Rates

Due to a lack of on-going government support, and increased regulatory requirements and scrutiny, Moody’s has indicated it might downgrade the debt ratings of Bank of America, Citigroup, and Wells Fargo. Although on the surface a downgrade of debt ratings for the three largest US Banks may not seem to impact the consumer; the truth is the impact could be substantial. Increased borrowing costs will damage Bank margins and decrease profitability. In order to overcome this loss in profitability, borrowing costs and fees to both consumer and commercial borrowers will increase, as Bank customers feel the burden of this change in ratings.