S&P Predicts Volcker Rule to be Easier than Expected
Last week, on November 26, 2014, credit rating agency Standard & Poor’s (S&P) released a revised rating of Goldman Sachs and Morgan Stanley’s debt outlook. S&P raised the two banks’ respective debt ratings from negative to stable. The enhanced assessments are the result of improving expectations of the Volcker Rule.
Originally expected to dramatically restrict investment banking activities, the finalized regulatory proposals are considered to be much more palatable for the industry. In it’s release, S&P said it views both Goldman Sachs and Morgan Stanley “as relatively stable and see less downside risk.” S&P also cited the two banks’ “strong market positions” as key factors in contributing to their positive credit ratings. In its assessment, both banks’ operating subsidiaries received an A rating.