As the world digests the fallout of the recent Standard & Poor's downgrade of the U.S. debt rating, further downgrades by S&P or the other rating agencies could have significant long-term effects on the country's community banks.
The initial capital effects of these downgrades will be muted by current regulations and the fact that any potential decrease in value would likely not be enough to eat into bank capital positions. But the long-term interest rate increase that will inevitably follow these debt downgrades will undo the efforts of the Federal Reserve since the beginning of the financial crisis to keep ...
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