Moody’s was slow to deliver a negative take on banks, but now that it has, it will trigger a new wave of problems for already-struggling financial institutions.
The credit rating agency downgraded several small and midsize banks Monday night and put larger companies, like Capital One (COF), Citizens Financial (CFG) and Ally (ALLY) on negative watch.
"Are they late? The answer is of course. Does it matter? The answer is yes. It is going to drive their funding costs higher, and that's already a problem,” Hedgeye Financials analyst Josh Steiner explains in this clip from The Call @ Hedgeye. “This is going to further worsen their position from a funding cost standpoint.”
Hedgeye’s Financials analyst adds: “To shrug this off is a little arrogant. Yeah, everybody knows this, they’re getting around to it on a tremendous lag. On the other hand, it’s not nothing. It does matter. It’s not a profound thing, but you’ve got a camel walking across the desert and you just threw another straw on its back.”
Watch the full clip above.