The biggest US banks have faced new problems that may snowball into another global financial crisis. The recent closure of several financial organizations at once has seriously affected global markets. If at least one financial giant experiences the same, the world will hardly avoid a grave crisis.
Concerns were fueled by the fact that Moody’s cut the credit ratings of several large US banks. Moody's placed six banking giants, including Bank of New York Mellon, US Bancorp, State Street, and Truist Financial, on review for potential downgrades. Notably, Moody’s cut the ratings of 10 small and mid-sized banks by one notch without any warning. "Many banks' second-quarter results showed growing profitability pressures that will reduce their ability to generate internal capital," Moody's said in a note. It is highly possible that the ratings of some other banks will also be downgraded. Analysts suppose that the credit sustainability of the sector is likely to be tested by financial risks and declining profitability.
Notably, at the end of June, the Federal Reserve announced that "all 23 of the US banks included in the Federal Reserve’s annual stress test weathered a severe recession scenario while continuing to lend to consumers and corporations." "The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group, while continuing to provide credit to the economy in the hypothetical recession," the Fed said in a release.
