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Standard & Poor’s Cuts Ratings/outlooks On 22 U.s. Banks

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S&P Cuts U.S. Banks, Citing Regulation, Volatility (Update2)

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By Linda Shen

June 17 (Bloomberg) -- Standard & Poor’s reduced its credit ratings or revised outlooks on 22 U.S. banks, including Wells Fargo & Co., Capital One Financial Corp. and KeyCorp, citing tighter regulation and increased market volatility.

“Financial institutions are now shedding balance-sheet risk and altering funding profiles and strategies for the marketplace’s new reality,†S&P credit analyst Rodrigo Quintanilla said in a statement today. “Such a transition period justifies lower ratings as industry players implement changes.â€

Banks and financial firms worldwide have recorded more than $1.4 trillion in writedowns and credit losses since 2007 as the U.S. housing market collapsed and the economy sank into recession. President Barack Obama is expected today to announce a proposal, crafted by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers, to revamp financial regulation.

The 24-company KBW Bank Index fell 3.2 percent as of 10:22 a.m., extending its drop so far this year to 19 percent.

S&P lowered Carolina First Bank, Citizens Republic Bancorp Inc., Huntington Bancshares Inc., Synovus Financial Corp. and Whitney Holding Corp. to “junk†ratings. High-yield, high- risk, or junk, debt is rated below BBB- by S&P.

The banking industry may face losses that may grow beyond current expectations, and “stress tests point to more pain in the future,†S&P’s Quintanilla said in the statement.

BB&T Corp., Regions Financial Corp. and U.S. Bancorp were also among the lenders downgraded today. S&P said it plans to hold a conference call tomorrow to discuss the ratings changes. PNC Financial Services Group had its A credit rating affirmed and its outlook was moved to stable from negative.

To contact the reporter on this story: Linda Shen in New York at lshen21@ceddings@bloomberg.net.

Last Updated: June 17, 2009 10:24 EDT

Not Green Shoots here i'm afraid.

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