Thursday, April 16, 2009
J.P. Morgan beats the street, but the consumer is getting hammered
J.P. Morgan, the only one of the nation's top four banks not to have posted a single quarterly loss since the credit crisis began, beat street expectations in its first quarter. JPM is, in the words of the Associated Press, a "bailout recipient," but it was one of several banks that took the money only after Hank Paulson had put it in thumbscrews. "Bailout victim" would be more accurate, I am sure. No wonder Jamie Dimon wants to pay back the TARP money as soon as the government will permit him to.
The news was not all good, unfortunately. Credit card charge-offs soared. The impact was not enough to hurt J.P. Morgan, but it does indicate that debt-laden consumers are really hurting.
2 Comments:
By 
, at
Thu Apr 16, 09:01:00 AM:
Consumers are to blame for being over-leveraged but the credit card problems are complicated.
Credit card companies seem to be profiling some industries like real estate brokers and docking their limits creating problems for responsible people by altering their credit utilization scores affecting their FICOS. This in turn drops their credit score from excellent to good in turn raising their card rates to 25-30%...a confiscatory rate in turn raising defaults.
Credit card rates for people with good credit have gotten way too high creating defaults...particularly among small business owners who float receivables on cards particularly in service industries.
According to the Main Street businesses in my area...the card cos are creating some of their own problems.
a moderate
By , at
Thu Apr 16, 09:15:00 AM:
If unemployment grows to 10% +/-, large issuers (like Chase and Citi) will be concentrated focuses of the relatively slight increase in societal pain (ie, we're at 8.5% now, and growing to 10% isn't a huge jump- unless one is a creditor to the families suddenly without income). My bet would be that consumers will get their own balance sheets in aggregate order well before the credit card issuers finish working their way through charge-off pain. JPMC has a diversified business, but Amex is less so. Despite Alan Abelson's recommendation in the recent Barrons issue, one has to wonder if Amex is in for more than their fair share of stress.
