Today, Moody's is trying to do its job in a more responsible way, and they have downgraded 15 large financial institutions. According to the New York Times:
"Two United States banks that were hit hard in the financial crisis emerged with the lowest ratings. Citigroup and Bank of America are now rated only two notches above junk. While Morgan Stanley avoided a worst-case scenario of a three-notch downgrade, its rating slipped by two levels."
I am encouraged that Moody's seems to be more on the job. Their reasoning seems pretty straightforward to me:
"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," Moody's global banking managing director Greg Bauer, said in a statement."
It has seemed to me that the financial giants have done everything they could to keep their basic business model of taking huge risks on the assumption that if they win they make personal fortunes, and if they lose, tax dollars would be used to bail them out and keep them from failing. This downgrade could be a wake-up call for the financial industry to actually make some real, substantive changes to the way they do business.
I would like to see banks become boring places to work once again, where their business is to lend money to actual businesses creating actual jobs and building the economy. I would like to see M.I.T. and Harvard graduates go on to get jobs in their fields of study rather than go to Wall Street to strike it rich - by taking risks with taxpayer's money by placing gambling bets in zero sum game markets that don't do anything to grow the economy.
