As the credit crunch continues with no end in sight, the debt rating agency Standard & Poor's sounded a warning Monday with a round of downgrades at Lehman Brothers Inc., Merrill Lynch & Co. and Morgan Stanley.
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The beleaguered trio heavily invested in U.S. mortgages, so with the collapse of the industry they have continued to feel the sting in their bottom lines. S&P downgraded its credit ratings on Lehman and Merrill to A from A+ and Morgan Stanley to A+ from AA-.
"The negative actions reflect prospects of continued weakness in the investment banking business and the potential for more write-offs, though not of the magnitude of those of the past few quarters," S&P said in a statement.
The New York-based debt rating agency also added that it may downgrade Wachovia Corp., which fired its CEO, and revised the outlooks to negative on Bank of America Corp. and J.P. Morgan Chase & Co. BofA is in the process of acquiring the U.S.' largest mortgage lender, Countrywide Financial Corp., while J.P. Morgan is purchasing Bear Stearns Cos. Both targets were weakened by their aggressive investments in the U.S. mortgage industry. - Gerald Magpily
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