Regulators tell banks not to sweat debt downgrade
Federal regulators of banks, savings and loans and credit unions have advised their charges that Standard & Poor’s downgrade of the country’s debt rating will not affect calculations used to determine capital levels, an important measure used to evaluate a financial institution’s ability to cover its losses. The calculation weighs the risk of certain forms of debt, with government securities traditionally assigned a risk factor of zero. That standard will not change after the rating agency’s downgrade of U.S. debt to AA+ from AAA.
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