That downgrade rebounds to companies, investors and consumers that effectively lend money to banks through providing deposits, entering derivatives trades or buying unsecured bonds from units of the lenders. The US government implicitly offers at least some support for the obligations of these too-big-to-fail entities, according to Moody’s.
“The downgrade of the US government’s rating indicates that it has less ability to support these highly-rated obligations,” Moody’s analysts wrote.
Through Moody’s downgrades, it removed the “one notch” of US government support the ratings previously included.
