..“It’s just very peculiar times,” said JPMorgan CEO Jamie
Dimon. “In the normal recession, unemployment goes up, delinquencies go up,
charges go up, home prices go down. None of that’s true here.” Instead, he
said, “savings are up, incomes are up, home prices are up.”
...
The arc of borrower defaults in that recession -- when
unemployment topped 10% -- could prove instructive in projecting the impact
this time. For example, the industry’s net charge-off rate doubled in 2008, and
then doubled again the following year before peaking at 3.12% in the first
quarter of 2010, federal data show.
unemployment topped 10% -- could prove instructive in projecting the impact
this time. For example, the industry’s net charge-off rate doubled in 2008, and
then doubled again the following year before peaking at 3.12% in the first
quarter of 2010, federal data show.
Banks collectively entered this year’s second quarter with
loss reserves equivalent to 1.76% of loan balances. After its massive provision
this month, JPMorgan’s reserves are now around 3% of total loans. If the entire
U.S. banking industry were to get to that level, it would mean more than $130
billion in provisions for this quarter alone.
loss reserves equivalent to 1.76% of loan balances. After its massive provision
this month, JPMorgan’s reserves are now around 3% of total loans. If the entire
U.S. banking industry were to get to that level, it would mean more than $130
billion in provisions for this quarter alone.
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