fbpx

WSJ: ‘This Is Not a Normal Recession’: Banks Ready for Wave of Coronavirus Defaults

WSJ: ‘This Is Not a Normal Recession’: Banks Ready for Wave of Coronavirus Defaults

America’s big banks are bracing for major losses by stockpiling billions of dollars as a result of expected coronavirus defaults. Photo by Jack Cohen on Unsplash

America’s big banks are bracing for major losses as a result of expected coronavirus defaults. JP Morgan Chase, Wells Fargo and Citigroup all announced they’ve been stockpiling billions to buffer their losses from loan defaults, reported The Wall Street Journal (WSJ). The move has resulted in adverse losses to second quarter profits, the report said.

The amount they’ve stored collectively is $28 billion, WSJ said. Top banking officials believe the recession caused by covid-19 will not recover anytime soon.

“This is not a normal recession. The recessionary part of this you’re going to see down the road,” JP Morgan CEO James Dimon said.

Unemployment numbers are expected to remain in the double digits into 2021 and renewed shutdowns due to a surge in coronavirus cases across the country make loan defaults even more likely.

Listen to GHOGH with Jamarlin Martin | Episode 73: Jamarlin Martin

Jamarlin makes the case for why this is a multi-factor rebellion vs. just protests about George Floyd. He discusses the Democratic Party’s sneaky relationship with the police in cities and states under Dem control, and why Joe Biden is a cop and the Steve Jobs of mass incarceration.

“The pandemic has a grip on the economy, and it doesn’t seem likely to loosen until vaccines are widely available,” Citigroup CEO Michael Corbat said.

According to WSJ, “PMorgan set aside $10.47 billion to cover potential loan losses, cutting its profit in half. Wells Fargo posted its first quarterly loss in more than a decade and socked away $9.57 billion to prepare for a wave of loan defaults. Citigroup’s profit fell 73%, weighed down by the $7.9 billion the bank set aside for an expected increase in soured loans.”

All institutions have also experience a drop in stocks. Despite relief programs showing some promise with helping borrowers get back to making payments, banks are expecting things to get worse before they get better.

“May and June will prove to be the easy months in terms of this recovery,” JPMorgan CFO Jennifer Piepszak said. “Now we’re really hitting the moment of truth in the months ahead.”

https://twitter.com/casertron3000/status/1283376496955011072