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) -- Moody's Investor Service on Wednesday lowered several of its debt ratings for

Bank of America

(BAC) - Get Free Report


Wells Fargo

(WFC) - Get Free Report

, while cutting its short-term debt rating for


(C) - Get Free Report


For Bank of America, the ratings agency lowered its long-term senior debt rating by two notches to Baa1, while downgrading short-term debt to Prime-2 from Prime-1, and its long-term deposit rates for BAC subsidiary Bank of America NA to A2 from As3, while affirming the bank subsidiary's short-term debt rating of Prime-1, according to a

Wall Street Journal


Moody's cut its long-term senior debt rating for Wells Fargo to A2 from A1, while cutting its short-term debt rating for


(C) - Get Free Report

by one notch to A2.

The ratings agency affirmed its ratings for Citigroup, except for the company's short-term rating, which was cut to Prime-2.

In support of its credit decisions for all three banks, Moody's said its actions reflected a lower "probability that the US government would support" the banks, "if needed."

Bank of America said in a statement that "Moody's decision to downgrade our credit rating is based on factors external to Bank of America: Their conclusion that the Dodd-Frank legislation will make the U.S. government less likely to support financial institutions in a crisis, and a possible further deterioration of the economy."

The nation's largest bank holding company added that "to minimize any potential impact of this decision on our business, we have been managing our liquidity carefully and we have prefunded our planned borrowing needs for the year."

Citigroup said in a statement that while the company was "pleased" with the ratings that Moody's affirmed, it "completely

disagreed with Moody's change to Citigroup's short-term rating," since the downgrade didn't "accurately reflect the significant progress Citi has made since Moody's last rated Citi more than two-and-a-half years ago."

Citi went on to say that as of June 30, the company "had $462 billion in cash and available for sale securities, representing approximately 25% of our balance sheet" with "ample liquidity based on a variety of stress tests and liquidity models, including the Basel III Liquidity Coverage Ratio, which we are already in compliance with, even though those requirements are not scheduled to come into effect until 2015."

Citigroup went on to say that it was "one of the best capitalized financial institutions in the world," with "a Tier 1 Common ratio of 11.6% and a Tier 1 Capital ratio of 13.6% as of the end of the second quarter."

Wells Fargo said in a statement that "today's announcement by Moody's solely reflects a change in their assumption regarding systemic support in light of the provisions of

the Dodd-Frank Wall Street Reform and Consumer Protection Act," and "does not affect Wells Fargo's unsupported ratings, which were affirmed today" and "have been increased three times since 2009, most recently on December 6th 2010."


Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.