The creditworthiness of America's A banks began to be rated in the early 1970s. At one point or another, Moody's, one of the main rating agencies, gave 17 banks the accolade of its top mark, triple A. Yet the banks' ratings soured. By 1990 the number of top-rated banks had fallen to two. In 1995 the last of these, J.P. Morgan, was downgraded. In recent years, however, the trend has been upward: upgrades have outnumbered downgrades every year since 1992 (see chart). So well set is the pattern that few noticed when, a few weeks ago, Moody's raised Wells Fargo, based in California and America's fourth-largest bank by assets, to triple A, the first such upgrade in 18 years. Two others, Bank of America and Citigroup, are just one notch below. Moody's says they are beginning to have triple-A characteristics. The upward trend reflects the rude health of most American banks. When ratings were heading downwards, the harbinger of trouble was a sharp economic contraction with a distinctive feature: high energy prices and collapsing property values in the 1970s; insolvent developing countries in the 1980s; and rancid syndicated loans in the early 1990s. The past three years have also witnessed economic slowdown and the destruction of industries, but leading banks' results show how dramatically America's financial sector has changed.
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