Moody’s Downgrades Credit of U.S. Banks

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Aug 22, 2023

I'm Coy Wells for U.S. Money Reserve. On August 8th, 2023, credit ratings firm Moody's Investors Service downgraded the credit rating of ten banks, including Webster Financial Corporation, M&T Bank Corporation, Pinnacle Financial Partners, and Commerce Bank Shares. Moody's also placed six banks ratings under review, including the Bank of New York Mellon Corporation, U.S. Bancorp, and the Cullen/Frost Bankers.

Lastly, Moody's shifted the outlook of 11 banks from stable to negative, including Capital One Financial Corporation, PNC Financial Services Group, and Citizens Financial Group. Throughout 2023, we've already seen several banks forced to close down. After the collapse of Silicon Valley Bank and Signature Bank in the United States, we saw the collapse of Swiss banking giant Credit Suisse. More recently, Heartland Tri-State Bank in Kansas closed on July 28th, and the operations were seized by the FDIC. Analysts claim that many of these banking problems began as liquidity issues arising from increasing interest rates.

In essence, analysts say these banks were borrowing short term money at high rates, then placing that money into long term bonds that paid lower rates. When depositors showed up looking to withdraw their cash, banks began to run out of liquid funds. Moody's downgrades and credit warnings reflect an ongoing anxiety about the stability of the banking system, especially smaller or regional banks.

Moody's says that many of the same liquidity issues affecting the banks that closed earlier this year could create problems for more banks in the near future. The downgrade also comes weeks after another high profile credit downgrade. On August 1st, 2023, Fitch Rating downgraded the credit rating of the U.S. federal government from a perfect Triple-A rating to a double A rating.

Both downgrades reflect a new sense of caution regarding financial stability that has left many consumers wondering how to protect their portfolios from volatility in financial systems. Some consumers have turned towards physical gold. According to The Wall Street Journal, a 2023 survey showed that 26% of Americans believe gold is the best long term asset, an increase of 11% from 2022.

Gold has long been considered a popular choice as a hedge against market volatility. Physical gold also exists outside of the traditional banking system and is independent from paper based assets like stocks, making it an ideal choice for many Americans looking to protect their portfolios from sudden shifts or drops in financial markets. To learn more about the benefits of owning physical gold and to receive your free gold information kit, call U.S. Money Reserve and speak to one of our dedicated account executives today.

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