Three French Banks are in a Bad Moody

Moody's, the ratings agency, downgraded the debt of three leading French banks on Friday, further darkening the mood and deepening the crisis in Europe. According to the

, “Moody's cut various ratings for Société Générale, BNP Paribas and Crédit Agricole by one notch, citing the problems each has had recently in raising funds on the open market.” Moody's claim that all three downgrades ere driven by funding constraints and “deteriorating macro fundamentals”, and it noted that the “probability the banks would need to seek public support remained very high.” However, according to the

, “Moody's said its ratings did take into account the fact that all three French banks were likely to benefit from state support if the crisis deepened.” Still, the Moody's assessment does not make for fun reading, with the agency also repeating the warning that Greece, among other countries, could yet default on their debts and exit the Euro Zone. The New York Times said that, “If Société Générale, BNP Paribas and Crédit Agricole continue to have trouble getting funding, Moody's said, the French government would very likely step in to provide them with financial support, raising the specter of at least a partial nationalization of France's biggest banks. The French government has a long history of stepping in to support its banks, considering them integral to the economy. French officials have said they are ready to backstop the banks if the markets forced their hand, but they insist the banks are sound.”