Massive US banks now prepare for millions to default according to Q2 reports, as institutions increase capital to cover insolvencies.
Big banks such as JPMorgan Chase, Bank of America and Wells Fargo are boosting their financial defenses as they prepare for customer inflow to dwindle, affecting the ability for the average American to pay their bills.
According to the latest Q2 2024 financial reports from major banks, they are significantly increasing the amount of capital they are setting aside to cover potential losses from rising credit card and loan defaults.
Collectively, these banks are allocating billions of dollars into emergency provisions and loan loss reserves to prepare for an anticipated increase in insolvencies and non-performing loans.
This reflects the banks’ growing concerns about the potential for a rise in credit card delinquencies and loan defaults in the coming months.
By bolstering their loss-absorbing capital buffers, the banks are attempting to proactively mitigate the financial risks posed by a potential surge in credit-related delinquencies and insolvencies.
This suggests the banks foresee a deterioration in consumer credit quality and are taking prudent steps to strengthen their balance sheets and resilience against such adverse credit trends.
The significant increase in these emergency loan loss provisions across the banking sector signals that the institutions are bracing for a potential economic downturn that could lead to a rise in loan defaults and credit-related write-offs.
This move underscores the banks’ efforts to position themselves to better withstand any upcoming challenges in the credit markets.
JPMorgan Chase is leading the way, increasing its provisions from $1.88 billion in the first quarter of this year to $3.05 billion – a $1.17 billion jump.
Meanwhile, Bank of America has set aside $1.5 billion, up from $1.3 billion in the previous quarter, and Wells Fargo set aside $1.24 billion, up from $938 million in the previous quarter.
The increasing balances show banks are anticipating increasing economic risk in the months ahead as commercial real estate flounders and as consumers pile up a whopping $1.02 trillion in credit card balances, according to TransUnion.
Delinquency rates across various types of debt are already on the rise, and the New York Federal Reserve says total US household debt hit $17.69 trillion in the first quarter of this year, an increase of $184 billion from the previous quarter.
The number includes mortgage balances, which rose by $190 billion to $12.44 trillion, and auto loans, which increased by $9 billion to $1.62 trillion.
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Also Read: A Massive US Bank is Now Closing Credit Cards
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A banker is now convicted for stealing money from customers while working at Bank of America over a 10-year period.
The personal banker was arrested after her years-long scam, resulting in nearly $300,000 being stolen, came to light.
Police in Seneca, South Carolina said they received a report in 2013 about missing money from an account with Bank of America.
The victim, who also reported the incident to the Customer Service department, told police he was missing around $30,000.
Investigators worked with Bank of America for several weeks after the crime was reported and learned that an employee who had been stealing money from several people in Oconee County.
The police said the victims would use the Bank of America location in Seneca as their primary bank and Bobbi Cortese was their personal banker.
Seneca Police investigators and the US Secret Service spent nearly a decade doing more interviews.
Meanwhile, Bank of America was given time to complete an internal investigation.
It was revealed that Cortese had stolen nearly $300,000 from four people while working at the bank.
Some of the money was in the victims’ bank accounts for life insurance payouts related to the deaths of their spouses.
Others had a lifetime of earnings that was supposed to be used for their retirement, said police.
Cortese would open accounts under the victims’ names without their knowledge or consent and would perform a “shell game.”
This is when a scammer uses the money from one victim to replace what she stole from another victim.
After investigating further, police said Cortese forged several documents and issued them to the victims to hide the theft.
She committed these acts for about four years while working at the Bank of America, said police.
Cortese was arrested in May 2023 and charged with four counts of breach of trust and two counts of forgery.
She was later fired by the bank, reports The-Sun.
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Also Read: A Massive Bank Now Freezes Money From Direct Deposits
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