Moody’s Corp. (MCO) says that the U.S. banking system and private credit markets are sound despite rising concerns about bad loans.
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The credit rating agency has sought to calm jittery financial markets by saying that midsize U.S. banks appear safe and there’s little evidence of systemic problems within America’s banking system. In a media interview, Marc Pinto, Moody’s head of global private credit, said that, when looking at the system as a whole, bad loan contagion that could trigger a broader financial crisis is not evident.
“When we dig deeper here and look to see if there’s a turn in the credit cycle, which is effectively what the market seems to be focusing on, we can find no evidence,” said Pinto. “Now that’s what we’re seeing today. That could always change. But if we look at the asset quality numbers that we’ve seen over the last several quarters, we’re seeing very little deterioration at all.”
Bank Stocks Fall
Moody’s comments come as bank stocks around the world sell off after regional U.S. lenders Zions (ZION) and Western Alliance Bancorp (WAL) disclosed bad loans related to the bankruptcies of two automotive lenders.
JPMorgan Chase (JPM) CEO Jamie Dimon appeared to exacerbate investor concerns about bad bank loans when he said on an earnings call with analysts and media that “when you see one cockroach, there are probably more.” However, Moody’s Pinto took issue with Dimon’s comment, saying on Oct. 17 that “one cockroach does not a trend make.”
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