In banks' downgrade, not much to worry consumers

Now that several of the big banks’ credit ratings have been downgraded, they may have to pay more to borrow money. And while the banks are hardly shy about passing higher costs on to their customers, many experts said they expected that the downgrade would have little effect — at least in the near term — on consumers.

That means bank customers can expect to see more of the same: low yields on certificates of deposit and savings accounts, and low interest rates on mortgages — if they can qualify. The banks have been adding and raising fees for some time now, but the experts said they did not expect a new round of charges.

On Thursday, Moody’s Investors Service cut ratings on 15 major banks, including the nation’s three largest institutions, JPMorgan Chase, Bank of America and Citigroup, which together have more than $6.4 trillion in assets. “We don’t expect it to have much of an impact on the consumer,” said Joseph Morford, a bank analyst at RBC Capital Markets. “The commercial banks are flush with deposits and liquidity, so if anything, many of them are retiring debt and are relying less on issuing debt to fund their operations.”

Moody’s, which had warned banks in February that a downgrade was possible, said all of the banks affected run the risk of big losses tied to their capital markets businesses.

Keith Gumbinger, vice president of HSH.com, a mortgage-information web site, noted that the nation’s largest mortgage lender, Wells Fargo, was not on Moody’s list.

“I don’t think you’ll find any appreciable effect” on mortgage lending, he said, adding the banks sell most of their mortgages to two government-controlled entities, Fannie Mae and Freddie Mac. But he also said he would not expect the downgrade to affect banks’ willingness to make jumbo loans to people buying expensive homes.

© 2012 The New York Times News Service