Moody's Investor Services dropped the credit ratings on Bank of America, Citigroup, and Wells Fargo.  BofA were downgraded the most. Moody's actions were based on its belief that Washington is less likely to come to the banks' aid and bail them out if needed.  Moody's did note that the government would probably provide some support to systemically important financial institutions - but the days of huge bailouts, like those that rescued BofA and Citi, are long gone. Bank of America Downgrades.

• Long-term senior debt was dropped 2 notches - from A2 to Baa1.
• Short-term debt was dropped 1 notch - from Prime-1 to Prime-2.
• Long-term deposit rating was dropped 2 notches - from Aa3 to A2.

Citigroup Downgrades.

• Short-term debt was dropped 1 notch - from Prime 1 to Prime 2.
• Long-term rating remains unchanged at A3.

Wells Fargo Downgrades.

• Long-term senior debt dropped one notch - A1 to A2.
• Short-term rating remains unchanged at Prime 1.

In a statement, Bank of America said: "Moody’s decision to downgrade our credit rating is based on factors external to Bank of America - their conclusion that the Dodd-Frank legislation will make the U.S. government less likely to support financial institutions in a crisis, and a possible further deterioration of the economy.  In fact, Moody’s explicitly stated that the downgrades do not reflect a weakening of the intrinsic credit quality of Bank of America." The actions conclude a review for downgrade announced on 6/2/11.  The outlook on the long-term senior ratings remains negative.  Moody's cites a decrease in the probability that the U.S. government would support the bank, if needed, for the downgrades.   [theflyonthewall.com, 9/21/11] Continue after the jump for charts of Moody's rating symbols and definitions.   Moody's Rating Symbols/Definitions re: Long-Term Corporate Obligation Ratings. Moody’s long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address  the possibility that a financial obligation will not be honored as promised. Such ratings use Moody’s Global Scale and reflect both the likelihood of default and any financial loss suffered in the event of default.

• Aaa   Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk.
• Aa     Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
• A       Obligations rated A are considered upper-medium grade and are subject to low credit risk.
• Baa    Obligations rated Baa are subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics.
• Ba      Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk.
• B        Obligations rated B are considered speculative and are subject to high credit risk.
• Caa    Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk.
• Ca      Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
• C        Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest.

Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa thru Caa.

• The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category;
• the modifier 2 indicates a mid-range ranking; and
• the modifier 3 indicates a ranking in the lower end of that generic rate.