Some Dark Clouds Are Dispersing As Downgrades Taper Off for Banks Credit downgrades among banks tapered off in the third quarter, a further sign that banks' troubles may be winding down. "You don't have to have a PhD in economics to determine that there might be an improvement," said John Lonski, senior economist at Moody's Investors Services. Moody's downgraded 10 bank issues in the latest quarter, the same number of issues downgraded in the second quarter. The dollar volume, however, was lower: $2.4 billion instead of $3.2 billion. And only seven banks were affected in the latest period. Both periods were a vast improvement over the first quarter, when Moody's downgraded 18 banks and $46.97 billion. About $40 billion of that sum was owed by Citicorp and Wells Fargo & Co. Even excluding those two companies, the first quarter was worse than either of the two that followed, Mr. Lonski said.