U.S. Banks May Be Downgraded by Moody’s on Pandemic, Fed Move

(Bloomberg) -- U.S. banks may be downgraded by Moody’s Investors Service in the wake of the Federal Reserve’s rate cut and as the worldwide coronavirus pandemic rattles markets.

The outlook for lenders was changed to negative from stable, Moody’s said Monday in an emailed statement.

Moody’s cited “the growing strain on banks’ operating environment and asset risk from the ongoing coronavirus disruption of economic and business activity.”

Major U.S. stock indexes have declined at least 23% this year as the virus takes hold, and business activity nationwide has been dampened. The Fed’s surprise weekend move to slash its benchmark rate failed to stem a stock selloff.

“The Federal Reserve’s emergency rate cut to zero will raise the pressure on profitability, but the quantitative easing will support banks’ already strong liquidity,” Moody’s said.

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