The downgrades reflect Moody's concern over the ability of the banks to repay their debts during times of crisis. Moody's had said in February that it was considering downgrading the credit ratings of major banks in the U.S. and in Europe.

A downgrade usually means banks will have to pay more for its debt. Investors demand higher interest for riskier debt, which is what the downgrades represent. However, with interest rates already at rock-bottom levels, the downgrades may not affect the cost of funding for the banks that much.

The stock market has also priced in any negative impact from the ratings downgrades, according to Bert Ely, a banking consultant in the Washington, D.C. area. "They've been telegraphing this thing for months," Ely said.

In a sign that investors were taking the news in stride, stocks of major U.S. banks rose in after-hours electronic trading. Moody's made its announcement after regular stock trading had closed.