S&P's Latest Delusion: It’s 'Increasingly Clear' Banks Won't Get Bailouts via Businessweek

Standard & Poor’s (MHP), saying that it is “increasingly clear” that the government may not bail out big banks in another crisis, downgraded JPMorgan Chase’s (JPM) credit rating outlook this morning to “negative,” bringing it into line with seven other key financial institutions.

Since the bank rescues of 2008, investors have assumed that the United States government and others around the world won’t let banks fail, lest they bring the economy down with them. That’s more or less still the consensus. Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.) introduced a bill in April on the theory that the biggest legislation to come out of the crisis, the Dodd-Frank Act, hasn’t adequately solved the problem of “Too Big To Fail.” Bloomberg View argues that the largest U.S. banks get a taxpayer subsidy of $83 billion a year because of this perception, realized in the form of lower borrowing costs.

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