Fitch Installs Its Own Glass-Steagall

Fitch is being clever for another reason as well. By being first to downgrade these major banks, they can do it with relatively minor consequences, since there are still 2 out of 3 ratings agencies that haven't downgraded yet.

SOP for funds with credit quality requirements measured by the ratings agencies is typically that at least 2 out of the 3 agencies must agree on the rating.

If one of the three downgrades, no changes have to be made to the fund composition, but if a second downgrades it could set off a huge wave of selling and rebalancing as funds adjust their portfolio credit quality.

It's the second agency to downgrade these banks that will really throw a monkey wrench into the financial system. Fitch may be reading the writing on the wall (Euro crisis + US political gridlock) and betting that downgrades will be inevitable, so may as well get the jump on the other two agencies.