S&P Downgrades Eight Big US Banks

S&P has cut ratings on 8 US banks, U.S. Global Systemically Important Bank Holding Companies Downgraded Based On Uncertain Likelihood Of Government Support

The agency said the move reflected its view that the US government’s likelihood of providing aid to banks was now “uncertain”.

Based on our review of progress made toward putting in place a viable US resolution plan, we now consider the likelihood that the US government would provide extraordinary support to its banking system to be “uncertain” and are removing the uplift based on government support from our ratings.

The move comes after the Federal Reserve proposed a rule on banks’ “total loss absorbing capacity”, or TLAC, earlier this year, that said that banks must carry capital and liabilities equal to 18 per cent of risk-weighted assets that can be written off during times of trouble.

Above is a chart of the actions taken today from S&P:

the Federal Reserve will eventually create a financial crisis far worse than 2008-2009 which will require an entire reset of the United States financial system.