S&P Cuts Credit-Rating Outlook of Goldman and Lehman

On Friday, Goldman Sachs [[gs]] and Lehman Brothers [[leh]] had their credit-rating outlook cut to negative by Standard & Poor’s, which said Wall Street banks’ profits may decline as much as 30% this year. S&P said in a statement that their current expectation is that net revenue could decline between 20 and 30% year-on-year for independent securities firms. However, S&P affirmed its long-term credit ratings for Goldman and Lehman. S&P said that even though the Fed’s financing for JPMorgan [[jpm]]’s takeover of Bear Stearns [[bsc]] “mitigates liquidity concerns”, they still “see some possibility, were there to be persisting capital markets turmoil and sharply weakening economic conditions, that financial performance could deteriorate significantly”.

Credit Suisse [[cs]], Switzerland’s second-largest bank, said it will write down $2.65 billion after a “small number” of its traders deliberately mispriced residential mortgage-backed bonds. Credit Suisse also said it’s unlikely to generate a profit this quarter.

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