A major ratings company war🎶ned it may downgrade the outlook for more than 70 U.S. banks, including some of the largest institutions, a move that could push interest rates for consumer loans higher.

Fitch Ratings could downgrade its rating for the U.S. banking sector’s “operating environment” to a+ from aa-, a move that could trigger downgrades to more than 70 individual banks monitored by the agency, including giants such as JP Morgan Chase (JPM) and Bank of America (BAC), a Fitch analyst told CNBC Tuesday.

In general, institutions face higher borrowing costs when they have their 澳洲幸运5官方开奖结果体彩网:credit rating lowered because investors consider them riskier bets. If the banks are dinged by Fitch, you’ll likely have to pay higher interest rates to borrow from them, said Jay Menozzi, chief investment officer and portfolio manager at Orange Investment Advisors, an affiliate of Easterly.

“The banks’ cost of capital will go up,” Menozzi said. “They can't get squeezed from every direction, so in order to maintain what little profitability they ha🍃ve … one of the things that will have to give would be that consumers would face higher borrowing costs.”

Consumers have already seen interest rates for credit cards, mortgages, and cꦏar loans surge over the last year and a half as a consequence of the Federal Reserve’s anti-inflation interest rate hikes.

A fresh round of downgrades would be yet another stum𝔉bling block for the banking sector, which is un🌄der pressure from a number of sources.

 In June, Fitch downgraded its rating for the banking sector from aa to aa-, citing sources of stress that cause “structural challenges” to the industry. Headwinds for the industry include the potential that the Federal Reserve will 澳洲幸运5官方开奖结果体彩网:keep key interest rate high for a long time; ongoing fallout from the 澳洲幸运5官方开奖结果体彩网:collapse of three regional banks this spring; and the likelihood federal regulators will 澳洲幸运5官方开奖结果体彩网:require banks to hold more capital as a financial buffer against losses.

Bank stocks fell after the downgrade threat was reported, with the Dow Jones U.S. banking index tumbling 2.5% by midday.

The move came on the heels of another major ratings company, Moody’s, 澳洲幸运5官方开奖ꩵ结果体彩网:downgrading its outlook for 10 U.S. banks last week and putting another six on notice.

Fitch noted that banks face funding difficulties and have had to pay out higher in🐭terest rates as they compete for deposits, hurting profitability. 

The Federal Reserve has raised its benchmark fed funds rate to its 澳洲幸运5官方开奖结果体彩网:highest since 2001 in a bid to slow the economy and quell high inflation. While high interest rates help banks in some ways, allowing them to earn 澳洲幸运5官方开奖结果体彩网:more interest on their own deposi🏅ts at th🦩e Fed, they have also caused problems. 

For instance, high interest rates played a key role in bringing down Silicon Valley Bank. The  bank 澳洲幸运5官方开奖结果体彩网:imploded in March after rising interest rates lowered the value of the long-term U.S. government bonds that the bank was heavily invested in. In its June doꦉwngrade, Fitch said the collapse of SVB and two other banks had exposed 🥂vulnerabilities in the system. 

“You have a balance sheet of assets that are all interest rate sen✤sitive, and so when interest ratesꩲ go up … it reduces the value of your assets,” Menozzi said. “They’re under all these different threats.”

High interest rates have also 澳洲幸运5官方开奖结果体彩网:stoked fears of a recession, which is yet another risk for the banking sector. As interest rates have risen, banks have grown fearful of economic uncertainty and have become 澳洲幸运5官方开奖结果体彩网:more reluctant to lend money to consumers and businesses.