A significant recession could develop, if banks decide to sell the loans they own rather than make new ones. At present, the pressure to take this path is rising.
Auto loans are down by $1.3 billion; other consumer lending is off by $0.6 billion. Corporate and investment loans are down by $6.3 billion. These declines are partially offset by small gains in other lending sectors, the most important of which appears to be margin loans on securities.
These moves are brilliant. They reduce the bank's exposure to losses. They increase its profits from trading, and they obtain securities gains as longer duration securities continue to rise in price.Adam Smith was wrong If JPMorgan continues its policy of selling rather than originating loans, it will help itself. It will fail the economy, however.
When third quarter banking industry earnings are produced in October, it is highly likely that banks that have been originating loans will be explaining why their margins fell, their loan losses went up, and the earnings growth was muted. Banks who were selling loans and managing their securities portfolios will be discussing why their profits were so high.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
MSNBC’s O'Donnell Admits ‘Error In Judgement’ In Trump Report After Legal ThreatThinly sourced report claimed Russian ties to Trump bank loans.
Read more »
MSNBC’s O'Donnell Admits ‘Error In Judgement’ In Trump Report After Legal ThreatThinly sourced report claimed Russian ties to Trump bank loans.
Read more »
China Construction Bank says 56% of new loans reference revamped Loan Prime RateChina Construction Bank's chief finance officer said on Thursday that 56% o...
Read more »
S&P 500 could hit a death spiral down to 2,100 if a recession comes, strategist saysThere's a case to be made for a 27% plunge in the S&P 500 if global central banks are unable to prevent a recession, says widely followed strategist Sven Henrich.
Read more »
NBCUniversal Threatened With Defamation Suit By Donald Trump Over “Russian Co-Signers” Bank Loans ClaimUsing the same lawyer that scored Hulk Hogan a multi-million dollar payout over a sex tape, Donald Trump today is aiming to body slam NBCUniversal and MSNBC’s Lawrence O’Donnell to “retract, correc…
Read more »