Credit ratings agency Moody’s has cut the crediting ratings of the three big US banks after deciding the US government is less likely to bail them out in future difficulties.

Morgan Stanley, Goldman Sachs and JPMorgan Chase have had the ratings on their long-term senior unsecured debt lowered to Baa2, Baa1 and A3 respectively.

This is the second rating agency to cut ratings after Standard & Poors in June.

Robert Young at Moody’s stated: ‘We believe that US bank regulators have made substantive progress in establishing a credible framework to resolve a large, failing bank.’

‘Rather than relying on public funds to bailout one of these institutions, we expect that bank holding company creditors will be bailed-in and thereby shoulder much of the burden to help recapitalise a failing bank.’

What are credit ratings?

A credit rating is an assessment of a company or government’s ability to pay ¬†interest and repay capital. The higher the rating, the lower the assumed risk of default. Ratings range from AAA (Prime) to C or D (In Default).

Read more on the Financial Times website.

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