S&P Cuts Outlook On Bank of America

Standard & Poor's lowered its outlook on Bank of America (NYSE: BAC), the largest U.S. bank, to ''negative'' from ''stable,'' saying that bond holders could endure losses if the government has to offer further financial support to large banks. S&P also affirmed Bank of America's investment-grade counterparty credit ratings at A and A-1.

A bill recently passed by Congress penalizes bondholders in banks that receive bailouts funded by taxpayer dollars. The bill also attempts to scuttle company-specific bailouts.

The negative outlook means further downgrades are possible. While Bank of America is likely to meet its current debt obligations, S&P said the bank is more vulnerable to a weak economic climate than its more higly rated rivals.