Bad consumer loan write-offs surge at Big Four U.S. banks

Bank of America has become the latest major lender to set aside more reserves as more U.S. consumers fall behind on their mortgage payments, even as executives played down fears of a looming crisis. In the first three months of 2023, the four major U.S. banks including Goldman Sachs, Wells Fargo, and JPMorgan Chase wrote off a total of US$3.4 billion in non-performing consumer loans, a year-on-year increase of 73%. Combined with the additional provisions, the four institutions have set aside their highest levels since the early days of the pandemic. Banks have benefited from the strength of U.S. consumers for several years as credit losses fell to record lows. Now, Americans are once again defaulting on their loans as high inflation erodes savings. But so far, bank executives have insisted that the recent increase in provisions is nothing more than a normalization of losses after pandemic-era government stimulus programs artificially depressed consumer defaults.