Accountability
Amid potential looming banking crisis, Moody’s downgrades Signature Bank to junk
Amid this week’s shocking collapse of two regional banks, ratings firm Moody’s has downgraded one of the banks, Signature Bank, to junk territory and is considering downgrading more banks in the near future.
After the collapse of Signature Bank and Silicon Valley Bank this week, new fears are rising about the state of the US banking system. Government agencies are scrambling to prop up the financial system as the Federal Reserve took steps to ensure customers could gain access to their money from the collapsed banks.
Along with downgrading Signature Bank, Moody’s has also placed six other banks under review for being downgraded as well. First Republic Bank (FRC.N), Zions Bancorporation (ZION.O), Western Alliance Bancorp (WAL.N), Comerica Inc (CMA.N), UMB Financial Corp and Intrust Financial Corporation are all in danger of being downgraded.
Moody’s also changed its overall outlook on the state of US banking on Monday, dropping it from a “stable” to a “negative” rating and citing a ‘rapidly deteriorating operating environment.’ In a statement, Moody’s explained, “We have changed to negative from stable our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY.”
The banks’ collapses signal a tough fight for the Federal Reserve, which has been battling the need to raise interest rates further amid growing consumer prices. Federal Reserve Chair Jerome Powell told a Congressional panel in a hearing this week, “Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.”
Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.
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