The announcement came after the closing bell, after the noise of the day was over. Moody’s bond rating agency cut the rating for 15 banks in the US and Europe, hitting all of the big ones at one. JP Morgan, Goldmann Sachs, Morgan Stanley, Barclays, Credit Suisse, Deusche Bank, Société Générale – pretty much every major investment bank was hit with major downgrades.
Reaction in the press was swift. “This has been a long time coming” was one way of putting it, with speculation that “Should any major bank be considered investment grade?” The entire financial system is downgraded at once and it was something like a big yawn.
But there is a story here. True, it has been moving in slow motion for a long time, so a downgrade by Moody’s is just one event in a long chain. But it still means something, and the effects of this may ripple for a long time.