S&P continues to restore some semblance of credibility (at the zero sum expense of its Warren Buffett controlled peer), after it downgraded 22 banks earlier today, some of which rather viciously, and all for good cause. This is how the McGraw Hill company justified its action today:

The actions reflect our belief that operating conditions for the industry will become less favorable than they were in the past, characterized by greater volatility in financial markets during credit cycles, and tighter regulatory supervision.

Our overall assessment of the U.S. banking industry incorporates the following key points: The industry is now in a transition and will likely undergo material structural changes; the loss content of loan portfolios should increase, but recent capital rebuilding should help banks defray these losses; stress tests point to more pain in the future; we don't view regional banks as being highly systemically important; and potential losses could increase beyond our current expectations.

As a result of the downgrades this week, as well as those since mid-2007, the counterparty ratings on U.S. banks (at the operating subsidiary level) have fallen by an average of two notches, to 'BBB+' today from 'A' before the crisis began in June 2007. However, said Mr. Quintanilla, the high number of firms with negative outlooks suggests that the ratings could still decline if the credit cycle is longer and/or deeper.

The following is the list of banks that got the woodshed treatment.