Moody's on Tuesday affirmed the long-term and short-term ratings of Bank of America, Citigroup, and Wells Fargo. But, the rating agency said it changed its outlook on the trio to negative from stable after the recent passage of landmark legislation in Washington, D.C.

The rating agency's outlook was prompted by the recent passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) – “a law that, over time, is expected to result in lower levels of government support for U.S. banks.”

None of these banks' unsupported ratings, such as their bank financial strength ratings, or BFSR, were affected by this outlook change. The rating outlook on Bank of America's and Citigroup's unsupported BFSR is stable, while the rating outlook on Wells Fargo's BFSR is positive.

"Since early 2009, Bank of America, Citigroup, and Wells Fargo's ratings have benefited from an unusual amount of support," said Moody’s. “This support has resulted in debt and deposit ratings that range from three to five notches higher than that indicated by the banks' unsupported, intrinsic financial strength.

Moody's said "the intent of Dodd-Frank is clearly to eliminate government -- i.e. taxpayer -- support to creditors. To achieve this, the law attempts to strengthen the ability of regulators to resolve complex financial institutions, while at the same time strengthening the supervision and regulation of such institutions to reduce the likelihood that they will need to be resolved in the future."

Over the near-term, Moody's said in a note to investors, regulators will continue to face significant obstacles when trying to resolve complex, interconnected, global firms without risking a "systemically threatening" contraction in credit.

Therefore, the rating agency said it continues to believe the current ratings on these three banks are still appropriate.

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