BREAKING: Moody’s lowers outlook for US banking system to negative due to ‘rapidly deteriorating operating environment’ | The Post Millennial

On Monday, credit rating service Moody’s lowered its outlook for the US banking system from stable to negative, citing a “rapidly deteriorating operating environment.”The move comes just days after Silicon Valley Bank, the sixteenth largest in the country, collapsed along with a number of smaller financial institutions.

“We have revised our outlook on the US banking system to negative from stable to reflect the rapid deterioration of the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank and Signature Bank (SNY) and the failures of SVB and SNY,” Moody’s said in a report.

According to CNBC, the downgrade could affect credit ratings and thus increase borrowing costs for financial institutions.

Moody’s explained that “banks with significant unrealized securities losses and with non-retail and uninsured US depositors may still be more sensitive to depositor competition or ultimate flight, with adverse effects on funding, liquidity, earnings and capital.”

“We expect pressures to continue and be exacerbated by ongoing monetary policy tightening, with interest rates likely to remain higher for longer until inflation returns to the Fed’s target range,” the agency said, adding that “U.S. banks are also now facing strong increases. deposit costs after years of low funding costs, which will reduce earnings at banks, especially those with a larger share of fixed-income assets.”

This is a breaking story and will be updated.

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