The Doomsday Scenario Has Happened: Here's What Banks Said They Would Do

Friday night the S&P downgraded the U.S. credit rating from AAA to AA+.
To bankers, a default, resulting in a downgrade, coupled with higher capital requirements is the "doomsday scenario" that banks said they were preparing for last month.

This is totally different from a default, but banks were preparing for both.
Phillips, a political economist at Goldman Sachs, warned clients on a conference call last month that financial sector banks might have higher capital requirements if Treasuries are downgraded. The complicated factor comes in with some of the larger firms, there could be a slight uptick in the calculated capital required to be set aside related to holdings. But a very minor change in capital requirements…."

Find out more at http://www.businessinsider.com/now-banks-might-dump-treasuries-default-2011-8?utm_source=Triggermail&utm_medium=email&utm_term=Clusterstock%20Select&utm_campaign=Clusterstock_Select_080811