3 Things That Could Move Financial Stocks Today

NEW YORK ( TheStreet) -- Here's the news and headlines that could move financial stocks today.

General Electric ( GE) had its debt ratings cut by one notch on Tuesday, with rating agency Moody's citing the increased risk to GE's finance unit, General Electric Capital Corp.

The parent company had its rating drop to Aa3 from Aa2, while GE Capital's rating fell to A1 from Aa2.

Moody's pointed to GE Captial's primary source of funding -- the money markets -- as the reason for the downgrade. Moody's said although the unit survived the 2008 financial crisis, GE Capital continued to be weighed down by "material risks associated with the firm's funding model."

A statement released released with the downgrade added that GE Capital has taken steps to insulate itself from the risks of short-term funding since the crisis, including reducing its reliance on commercial paper borrowing, accumulating cash and adding deposits and secured financing to its balance sheet.

"Nevertheless, we believe that GECC's revised strategies do not fully mitigate risks to its credit profile associated with its high reliance on confidence-sensitive funding," said Moody's senior analyst Mark Wasden in the statement.

The ratings cut will likely rekindle debates around the future of GE and GE Capital, including the possibility of a breakup.



The Commodity Futures Trading Commission (CFTC) will file a civil case against JPMorgan Chase ( JPM) this week for its role in the 1998 collapse of Lehman Brothers, according to an article in the New York Times.

JPMorgan is expected to settle the charges for a $20 million fine, the article states citing people briefed on the matter, adding that the CFTC accusations focus on the JPMorgan's role in overextending credit to Lehman leading up to its bankruptcy.

The CFTC will also accuse JPMorgan of withholding Lehman customer funds for two weeks following the bank's collapse rather than turning the funds over to authorities, the article states.

JPMorgan played a pivotal role in the collapse of Lehman, including acting as a major credit and trading counterparty prior to its downfall and as acting as a conduit for $138 billion in Federal Reserve cash advances following the bankruptcy.



The Financial Stability Oversight Council (FSOC) on Tuesday unanimously approved final rules that would place new regulatory scrutiny over the largest nonbank financial companies.

The rules will tag those nonbank financial institutions with more than $50 billion in assets -- and that are highly leveraged -- as "systemically important financial institutions" (SIFIs) that will be subject to extensive bank regulation.

"This authority is critical in helping to protect the financial system from future crises," a statement from the FSOC said following approval.  "Before the recent crisis, the largest, most interconnected nonbank financial companies were not subject to the type of regulation and consolidated supervision that applied to bank holding companies. "