Commercial Investment Bank Ratings May Survive Subprime Woes
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SOURCE: ReutersIn an otherwise bleak time for the stock market and commercial real estate investors, today Moody's Investors Service said that it did not believe the subprime damage would negatively impact the ratings of major U.S. commercial and investment banks because of their diversified earnings power.
The banks' overall exposure to the subprime sector is modest relative to their capital and liquidity, Moody's said in a statement. "Our evidence suggests that risk management is working effectively during this stress period," the rating agency said.
Diversification is allowing the banks to post solid results despite write-downs resulting from a severe decline in prices and evaporation of liquidity in the subprime sector, Moody's said.
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