Using customer deposits or should I say steal.................
By Matt Scuffham and David Henry
LONDON/NEW YORK | Fri Jun 22, 2012 2:17pm EDT
(Reuters) - Downgrades by ratings agency Moody's will make funding more expensive for banks that rely the most on capital markets, while reinforcing the competitive advantage of "safe-haven" banks that can fund themselves from stable customer deposits.
Stock and credit markets were nonplussed over Moody's announcement that it had downgraded 15 of the world's biggest banks, as the rating agency's lowering by up to three notches had been widely anticipated. The cost of insurance against default for each of the five biggest U.S. investment banks fell on relief that Moody's was not harsher, said Otis Casey, research director at Markit in New York.
The KBW index of U.S. banks was up nearly 1 percent in early afternoon in New York after European bank shares rose 0.1 percent. Shares of New York-based Morgan Stanley were up 0.9 percent after initially jumping more than 3 percent in reaction to its rating having been cut less than feared.
Aside from the immediate market moves, the downgrades reinforce a trend that has seen weaker banks punished for their risk-taking, while stronger banks are rewarded for conservative funding models, ensuring lower costs and higher margins.
Not only will funding costs rise for the worst-rated banks, but trading partners are bound to ask for more collateral - and steer
http://www.reuters.com/article/2012/06/22/us-financial-moodys-downgrades-idUSBRE85K1QL20120622?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FbusinessNews+%28Business+News%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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