The economic environment is depressed, and the two largest banks in the United States, JPMorgan Chase and Wells Fargo, have fallen into huge losses

The financial woes of two of the largest banks in the US, JPMorgan Chase and Wells Fargo, have come to light as they report significant losses due to customer debt defaults.

Together, these banks have declared a total of $3.5 billion in debts that customers are unable to repay, highlighting ongoing economic struggles despite a slowdown in inflation.

JPMorgan Chase

• Net Charge-Offs: $2.2 billion in Q2 2023, a $200 million increase from the previous quarter and an $800 million increase from Q2 2022.
• Additional Losses: $500 million in failing mortgage investments.
• Quarterly Profit: $13.1 billion, with stock prices near an all-time high.

Wells Fargo

• Net Charge-Offs: $1.3 billion in Q2 2023, a 70% increase from $764 million in Q2 2022.
• Quarterly Profit: $4.9 billion, despite a 6% drop in shares due to net interest income falling short of estimates.

Wells Fargo’s CFO, Michael Santomassimo, attributes these losses to customers struggling with rising credit card balances and dwindling savings, particularly those on the lower end of the wealth spectrum. Inflation, though reduced in pace, continues to have a cumulative impact on many individuals.

US banks have been warning about increasing credit card balances and issues in the commercial real estate sector since last year.

These concerns are now manifesting in significant financial losses, as seen with JPMorgan Chase and Wells Fargo.

Fraud Case Highlight

In a separate, troubling case, JPMorgan Chase and Bank of America are under scrutiny for their fraud prevention systems after a 76-year-old man, Bogdan Nalivaiko, lost his life savings of $800,000 to scammers.

The scammers convinced Nalivaiko that he had won $17 million but needed to pay taxes upfront to receive the winnings.

Over a few weeks, Nalivaiko transferred large sums of money out of his accounts at both banks without any red flags being raised.

• Response from Banks: The banks claim they did everything they could to prevent the fraud, but Nalivaiko's daughter, Julia Elders, argues that they failed to notice the suspicious activity.
• Aftermath: Nalivaiko is now essentially homeless, with scammers continuing to harass him for more money. Elders has set up a GoFundMe campaign to help her father recover.

Conclusion

The financial struggles of JPMorgan Chase and Wells Fargo underscore the ongoing economic challenges faced by many Americans, particularly those with lower incomes.

Additionally, the case of Bogdan Nalivaiko highlights potential gaps in the fraud prevention systems of major banks, raising questions about their ability to protect vulnerable customers.