![]() ![]() ![]() ![]() Banks are now required to guard against potential losses during the lifetime of a loan, instead of just over the course of the next year. “Having said that, given the rise in unemployment claims, we do expect consumer losses to increase later this year and potentially into 2021.”Įconomists at JPMorgan warn unemployment will spike to 20% and GDP will collapse by an unthinkable 40% during the second quarter.īeyond the economic shock, the dramatic reserve builds at major US banks were driven by a new accounting standard that took effect January 1. “We believe deferrals, coupled with government stimulus for individuals and small businesses, should aid in minimizing future losses,” Paul Donofrio, chief financial officer at Bank of America, told analysts during a conference call. (BAC), citing the “weaker current and expected economic conditions” increased its loss-absorbing reserves by $3.6 billion. That required a swift response from banks. Unlike the Great Recession, which played out over many quarters, this crisis came all at once. (JPM), America’s largest bank, reported a 69% plunge in first-quarter profit because it set aside a hefty $6.8 billion worth of reserves, largely to insulate against coronavirus-related defaults. The stock market is acting like a rapid recovery is a slam dunk. (Photo by Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images) Wang Ying/Xinhua/Getty/Getty Images NEW YORK, Ma- A man takes photos of the Wall Street Charging Bull in New York, the United States, March 24, 2020. ![]()
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