3 Things That Could Move Financial Stocks Today
NEW YORK(
) ---
Moody's Investor Service
downgraded six European nations on Monday, citing concerns with the way the debt crisis was being handled and the impact on the region's economies.
The ratings firm downgraded Italy by a notch to A3, with Malta, Portugal, Slovenia and Slovakia also losing a notch. Spain was downgraded by two notches. The move closely follows similar downgrade by Standard and Poor's and Fitch Ratings last month.
Moody's also warned U.K. of a possible debt downgrade if it does not implement measures to cut debt, departing from the other two agencies who have maintained a stable outlook for the U.K.
Moody's is also expected to announce downgrades to large banks that play an outsized role in the capital markets due to "Eurozone weakness and elevated economic and market uncertainties," according to a research report published Monday by
CreditSights
, citing comments made by the rating agency in a conference call.
Bank of America
(BAC) - Get Report
,
Citigroup
(C) - Get Report
,
JPMorgan Chase
(JPM) - Get Report
and
Wells Fargo
(WFC) - Get Report
may be among the banks that see the downgrade.
President Obama's plan to assess a $61 billion "Financial Crisis Responsibility Fee," unveiled Monday in his proposed budget to Congress, drew immediate criticism from the banking industry.
The proposed fee, which would be assessed to financial firms with assets above $50 billion, made its first appearance in the White House's 2011 budget and was projected to raise $90 billion over 10 years, according to The Washington Post.
The tax would impact financial firms with assets of over $50 billion, a group that includes Bank of America, Citigroup and Wells Fargo, among others.
Obama proposes to use the bank tax to fund a new refinancing scheme that will allow borrowers with private mortgages save $3,000 a year in mortgage payments.
Separately, the budget projections suggest that the Federal Housing Administration will exhaust its reserves in the coming year. The FHA insures lenders against losses for mortgages that meet their standards.
However, the White House noted that the $25 billion settlement with the five major banks will see $1 billion paid to the FHA in the form of fines, which will take care of the shortfall.
The
Federal Reserve
said it will announce the results of its decision on the
Capital One
(COF) - Get Report
and its merger with
ING Direct
"soon", delaying approval of the merger one more time.
The decision, expected Monday, would have helped provide an understanding of just what is a "Too big to Fail" institution. Some have argued that the merger of Capital One with ING would create another large, risky institution
Written by Shanthi Bharatwaj in New York
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