Withering Confidence – Moody’s Bank Downgrades 🏦

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Withering Confidence – Moody’s Bank Downgrades

The banking sector is vital to the United States, with banking assets making up about 56 percent of the economy. Because of this, banking crises are always some of the most concerning events because the economic system is at risk, which is what almost occurred in March when Silicon Valley Bank and Signature Bank collapsed. Confidence, which banks run on, was significantly low after the failures until the government and big banks stepped in to prevent the crisis from spilling over to other parts of the economy.

It seems as if confidence in our banking system is decreasing again, this time from the experts on Wall Street. On Tuesday, Moody’s, who is one of the bond crediting services on Wall Street, downgraded 10 regional banks across the country, including M&T Bank, which is valued at $23.141 billion. This has sparked fears among the financial market because the ratings signal that the problems mid-sized institutions faced back in March are persisting. The second quarter earnings showed that deposits in regional banks have decreased although stable, and the firm is concerned that deposits could continue to drop in the coming months. Moody’s is also concerned with the high interest rate environment, which is reducing the value of the banks’ assets, and it isn’t clear which way interest rates are headed as the Federal Reserve is still fighting inflation. Moody’s warned that rating cuts could be coming to larger institutions moving forward, which would be devastating for the sector, and we would likely see the market spiral downwards as a result.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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