Moody's Investors Service is reviewing the ratings of Bank of America Corp. Citigroup Inc. and Wells Fargo & Co. for possible downgrades.
The three banks' current ratings get a boost from an assumption the federal government would prevent them from failing in a crisis. Moody's said Thursday that this assumption may no longer be true.
In a statement accompanying the announcement, Moody's senior vice president Sean Jones said the Dodd-Frank Act makes clear the government "does not want to bail out even large, systemically important banking groups."
Moody's currently rates Bank of America's senior debt A2, Citigroup's A3 and Wells Fargo's A1. Implied government backing pushes Bank of America's rating up five spots, Citigroup's up four spots and Wells Fargo's three spots.
A downgrade would raise the banks' borrowing costs.