Moody's downgraded the ratings of Morgan Stanley, Goldman Sachs, JPMorgan Chase and Bank of New York Mellon by one notch on Thursday.

According to a press release Thursday, the downgrades were based on the likelihood of government bailouts as well as individual bank considerations.

The rating outlooks reflect "progress in U.S. bank resolution tools as a result of the Dodd-Frank Act," writes American Banker's Sarah Todd.

"We believe that U.S. bank regulators have made substantive progress in establishing a credible framework to resolve a large, failing bank," Managing Director Robert Young said in the release. "Rather than relying on public funds to bail-out one of these institutions, we expect that bank holding company creditors will be bailed-in and thereby shoulder much of the burden to help recapitalize a failing bank."

For the full piece see "Moody's Downgrades Four Major U.S. Banks" (may require subscription).