Will bank downgrade rock recovery?
Credit rating agency Moody's slams 15 global banks
- Duration 8:29
- Date Jun 23, 2012
Credit rating agency Moody's slams 15 global banks
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-- great shot that could rock the -- economy.
Credit rating agency Moody's slapping down fifteen global banks including five major US once.
And it hits as we find out homeownership is filing manufacturing is slowing and job creators are not doing much hiring.
So did these downgrades just upgrade the chance of another recession.
I -- when I'm Lori -- in for Brenda Buttner and this is Bulls and Bears.
The moment there -- this week Gary.
They're very concerned I mean I think this the markets are -- did this downgrade in my opinion -- the reason why you know market was up a bit today.
I've been saying since January that the market has is going to have trouble there's going to be continued volatility.
Going into the November election and I stick with that point I believe that the banks have severe problems.
Lending to small businesses is going to continue to be a problem and they're gonna need to look to other ways.
Whether it be ATM fees increased or quarterly statements that they're gonna have to charge ordered ordered -- -- Gary I know you know Essen.
-- now I agree laureates in May it was kind of silly -- group most of Kyle's point but this is trying to after the fact you know basically Moody's came out said.
Banks are going to be having trouble they are making as much money as I have in the past will be no big deal that doesn't know about big.
But captain obvious to the rescue but Kyle made -- the other good points and I do think the economy's in trouble basically.
We spent almost a torn dollars in stimulus we still have high unemployment.
It's not going anywhere we have tax increases.
Coming at the the bush -- tax credits expire we've seen really nothing good out of this economy and until people.
Start to get back working that's gonna start everything I don't see that.
Leveling off or are picking up any time -- that's what has me worried.
Lest you had the Fed with a knockout punch this week downgrading its assessment of the -- and and -- Toby I mean it could this downgraded the banks that Estrada breaks the camel's back for the US economy well.
You know but it it it could be -- -- he's a different reason remember that that the banks are out there already aren't letting his much chances -- normally half and they were just sort of go -- if you look it's actual numbers small business flooding actually is up quarter over quarter we started to get to that point.
Now with these -- without getting all the criteria they -- -- takes -- look at the big break coming -- put it up as collateral for all the stuff they've been -- fact that what what I think you're -- happen though -- I think you're gonna -- these regulators moved the goalposts -- -- -- so that they get extra time to -- this because this is a political weight and right now -- this is the one thing that could -- down.
Banks caught between a rock and a hard place in the sense because they're under now increase pressure to raise capital and keep their -- -- balance -- steady.
And firm at the same time -- under pressure -- right to continue lending to keep the growth engine moving along.
That's the news ironic dual mandate yeah.
System you have to lend money to losers but definitely are and -- and cats led investors to downgrade these banks about five years ago for the bank's stock to the worst report.
On the -- -- -- pretty much anywhere.
The bigs -- guys who were on Friday after the downgraded to a care's ability -- anymore at this point since just about eight years later on the rating that race.
I will say that the did the danger is that banks get -- you want it to actually get along Iraq wasn't his point that they get economy going to -- money people a little money down by real estate start a business that's a good thing don't you played safe and you only get a -- loan money the triple -- credits to people out there.
But you only -- -- Montreal people refinance who have good credit that's not gonna get us out of his slow growth economy so we want banks to get a little bar yeah two thousands and.
-- interest rates mortgage rates are at historic lows right now and making it even tougher for people Oprah banked -- alone might restraints -- so much now that it.
Exactly it even near the banks are that it.
It cannot operate under any kind of free market environment are so shackled.
Right now I mean let banks run free let them take -- what the problem.
-- -- we have this -- -- big to fail kind of thing and because there we have that that we also have all these restrictions.
The Jonas alluded to so they can only -- to people who don't need the money.
For -- -- even refinance my mortgage and ridiculous.
How hot dry -- a -- I got I could not.
That's a problem with the system where if we if the -- unshackled that they and end they were allowed to -- by the way but they should have been back in 2008.
Then we'd have a much stronger economy right now I think.
You know yet -- paying David Mercer is that downgrade again it's just about the financial industry.
It's not signaling that that the banks are any -- -- all of the imploding.
And or does -- signal that the economy.
Is going to implode as well and we shouldn't be taking the recent downgrade as an indicator.
That you throw the baby -- about -- look we've created four point two million.
Private sector jobs let's not forget that we created 435000.
Manufacturing jobs that drug put my money -- bets on.
And we should be encouraging and and you and raising the flag on that not raising a white flag because the banks got a downgrade and saying let's pack our bags the economy's going down.
Well wait I -- I -- all the hate and you know it you know and I feel like I feel like I'm like a John Kasich an Ohio governor of Ohio or Rick Scott out of Florida championing all the positive trends yet the Romney campaign is asking me.
Two I don't play that Lucy catcher he's get a lot of conflict with my fellow Kyle -- -- you.
You didn't -- that.
I -- -- I think that the regulatory environment is increased dramatically and unless they -- as Toby was alluding to let the shackles come off.
This this marketplace is gonna stay exactly where it is today and it's -- to try to long.
The banks you know would we weren't regulatory.
Did not get in the way two billion dollars and counting losses -- at JPMorgan ultimately.
David -- -- little -- -- -- -- yeah.
-- and now there's a lot and I think a lot of people.
In terms of mortgage rates in terms of my banking fees Jonas -- -- here what do you think the downgrade will ultimately mean at the end of the day.
Were in the election year there's a lot going on a lot more bad news on the economy in good news.
How does it sort out at the end let's say after the election.
If it raises the cost of borrowing banks and alternately it's gonna raise the cost of borrowing consumers it means credit cards mortgages etc.
-- him a little more expensive right now there'd -- ridiculously low levels for any kind of long however.
You've got to be a good credit risk to a bank it -- -- this is banks -- just they've they've lost faith in the American consumer ability payback alone.
They'd rather gamble brawl with the money it's what you saw going on do you warned that it's a better return on investment.
So you wanna see look at it banks are risky -- people thought they -- a few years ago.
That's great they need to make car loans to to keep the economy going with just acknowledge and it's a higher risk business than we originally thought about six years ago.
Yeah obviously you like that the banks are going to -- it bears points -- perfect five years and it is BetaNews flat up the bigger issue here is are they wouldn't have more constraints come out of the bag when -- just getting going we didn't get them in the bud.
It would two billion dollars left by GP Barnes and yeah.
I have -- lot of -- come on you guys it's not regulates and you just lost two million dollar -- -- -- a little bit regulates it detonated a bit about it but I think it was -- yesterday I was accidentally regularly I want other players -- money credit.
Ratings agencies because you guys alluded to this that they lots a lot of credibility especially after.
The 2007 financial crisis rating all those sub prime mortgage backed securities today AAA yeah.
We obviously the country's sovereign debt -- downgrade last summer so anyhow its credit -- -- these ratings agencies and again how quickly will we -- passes and is this the real problem on the economy is back weeks probably not -- and.
It was yeah -- in the World -- there's a lot of ratings -- wrong by the rating agencies it's very likely that people that really can bring these things partly due to meet with their -- more Bible that actually rained upon.
And it's a question of his model anyway I think what happens -- this kind of marketplace is the -- -- swings so.
Now -- the credit regions it rating agencies are gonna jump on the bandwagon right away gotta go guys thanks so much.