Moody's downgrades NYCB ratings to junk

Moody's downgraded NYCB's ratings from Baa3 to Ba2, which is considered a junk rating. The downgrade reflects Moody's views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense - the risk and audit functions of the bank - at a pivotal time, the agency said.

Rating agency Moody's downgraded New York Community Bancorp's long-term and short-term issuer ratings to junk on Tuesday and warned of further downgrades.

The agency also downgraded all long-term and some short-term ratings and assessments of its lead bank, Flagstar Bank. Moody's downgraded NYCB's ratings from Baa3 to Ba2, which is considered a junk rating.

The downgrade reflects Moody's views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense - the risk and audit functions of the bank - at a pivotal time, the agency said. The rating agency also said the elevated use of market funding may limit the bank's financial flexibility in the current environment.