Moody's Investors Service Inc. has cut Bank of America Corp.'s debt ratings on concern that higher losses on credit cards and home loan businesses will erode capital.

B of A's senior debt rating was lowered to Aa3, from Aa2, and the ratings of its units were also reduced. The lead banking subsidiary's financial strength rating was cut two levels, to B from A-minus.

Bank of America's "tangible common equity position remains relatively weak, leaving a modest cushion to absorb unexpected losses," Moody's said in a report issued Thursday. B of A's equity position probably will not improve before 2010, the rating agency said.

Investors have pushed down Bank of America shares more than 60% in 12 months.

B of A, the biggest U.S. bank by assets, expanded in that period by acquiring Countrywide Financial Corp., the biggest home lender, and Merrill Lynch & Co. Inc., the biggest brokerage.

Moody's raised Merrill Lynch's debt ratings to match those of Bank of America. The Charlotte company bought closed the Merrill deal last week. Integrating the New York securities firm presents "significantly greater" challenges than buying another commercial bank and potential employee and client defections, Moody's said.

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