Market Insights: AI and CLM Solutions for Credit Rating Downgrades


In our recent Market Insights series, we explored how 2018 regulatory changes, including amendments to Dodd-Frank aimed at smaller and mid-tier U.S. banks, set off a domino effect within the banking sector in 2023. These changes had unintended consequences, weakening the regulatory framework and increasing risk exposure. Major financial institutions faced formidable challenges, leading to significant impacts on their financial stability and subsequent bank failures. The resulting bank failures triggered a cascade of repercussions, including credit rating downgrades and proposed regulatory capital rules by U.S. regulators, further highlighting the interplay between heightened capital regulatory requirements and a bank’s credit rating.

This series of events highlights the importance of grasping the intricate relationship between credit ratings and banking contracts. To address this, our new brief, AI and CLM Solutions for Credit Rating Downgrades, introduces technology solutions designed to swiftly assess shifts in legal obligations and associated risks stemming from credit rating downgrades.

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