Financial stocks and exchange traded funds (ETFs) remain in sideways trading. One ratings firm provides a cautious outlook on three major banks as the financial-reform legislation is providing finishing touches.

The Financial Select Sector SPDR Fund (NYSEArca: XLF) is currently trading up 0.29%.

Moody’s Investor Service may cut the debt ratings on Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Wells Fargo & Co. (NYSE: WFC) if the Dodd-Frank financial-reform is enacted into law, report David Benoit and Drew FitzGerald for The Wall Street Journal.

The Dodd-Frank financial-reform would limit the explicit and implicit support the government provides to keep financial institutions from tanking.

“The support assumptions built into these three banks’ ratings are unusually high,” comments Moody’s Senior Vice President Sean Jones. “which may no longer be appropriate in the evolving post-crisis environment.”

Moody’s ratings firm puts BofA, Citigroup and Wells Fargo’s senior subordinate date at A2, A3, and A1, respectively.

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