When you have to celebrate “smaller losses” instead of “larger gains” it’s a dangerous sign of how far things have fallen. The banks are all really pleased with themselves since their losses were smaller than they expected. No gains, but still they cheer. Weird, no?
Of course this loss has a big catch to it. Last quarter only $9.9 billion was charged off as bad loans. So the banks can run to the government and write them off. Pretty slick to count that as a loss.
Many of the experts are saying this is because the economy is fundamentally healthier. Borrowers have more cash, banks are more responsible, and the government’s regulations are starting to kick in.
But is that really what’s happening? Or is this just a lull in the wave? I don’t think the experts see all angles and that’s been proven time and time again. What do you think? Will we see a resurgence of charge offs in the coming quarters?