“Money talks, bull**** walks”


I note with interest – and concern – a step that’s a very clear forecast of what lies ahead for consumers in the US economy.

Wells Fargo & Co said on Friday its second-quarter profit nearly halved as the bank set aside more funds to cover potential loan losses, while its mortgage lending business came under pressure from higher interest rates.

The fourth-largest U.S. bank reported profit of $3.1 billion, or 74 cents per share, compared with $6 billion, or $1.38 per share, a year earlier. Its total loan loss provisions were $580 million in the quarter, including a $235 million increase due to loan growth.

Under an accounting standard that took effect in 2020, banks must factor the economic outlook into loan loss reserves. Last year, the bank had released $1.6 billion from its reserves for loan losses as the economy rebounded from the pandemic.

Wells Fargo Chief Financial Officer Mike Santomassimo told reporters that retail and business customers remain strong, but the bank is prepared for a potential economic downturn.

“Things will probably get worse, but that’s already included in the overall scenario analysis and the allowance level we have for the quarter,” Santomassimo said.

. . .

Big bank executives have sounded cautious so far this earnings season, with JPMorgan Chase & Co’s Chief Executive Jamie Dimon likening the macroeconomic environment to a coming “storm.”

There’s more at the link.

Wells Fargo isn’t alone in increasing its reserves and provisions against default by its customers.  Nevertheless, the numbers above are a bit mind-boggling.  For a start, “its second-quarter profit nearly halved“.  Even with additional provisions against future losses, that’s astonishing.  Banks, like all other corporations, must pay dividends to their investors (shareholders).  For Wells Fargo to say to its shareholders, “Sorry, your income from your investment in us has just been cut in half”, and for them not to complain about it, speaks volumes.  They’re worried that if they don’t make the investment in reserves right now, they’ll be out a lot more money in future.

Secondly, this one bank has taken more than half a billion dollars of its own profits, in a single quarter, and allocated them as a reserve to write off debts – loans, mortgages, whatever – that it expects its customers to be unable to repay.  What’s it going to allocate next quarter?  And the one after that?  This is unlikely to be a one-off budgetary provision.  It’s the first major step in what’s likely to become a longer-term major problem.

Finally, what does it say about Wells Fargo’s expectations for the US economy?  Clearly, the bank isn’t greatly encouraged by what it sees “on the street”.  There’s an old saying that “Money talks, bull**** walks”.  Well, one of the biggest banks in the USA is talking with its money, despite the glowing forecasts by our politicians that all will be well.  It’s treating those forecasts as something that needs to walk.  That speaks volumes.

“He who has ears to hear, let him hear.”



  1. Let those with ears and eyes indeed.

    Distractions is a carnivals stock in trade ALSO Politicians.

    It's hard to pay attention to what is important when the Military Football game is on and "we're winning".

    Mass shootings so far, ALL Known to the FBI and such, police standing down and allowing criminal behaviors.

    Protect your family and trusted friends. Accept that betrayal is something that will happen given our Patriot Act "See something, Say something" and get rewarded for it behaviors.

    The Famine wars is here, count any day of "Peace" a blessing to prepare for the storms on the horizon.

    Pray for wisdom and act on it. Stop paying attention to the military football games friend.

    As Arthor Sido's comment said so well, "What you do TODAY will determine who survives in 18 months".

  2. A house built on sand……

    This is yet another look at the grains slipping loose and sliding out from under our economy.

  3. The highlighted area indicsated the WF changed the Dividend for stock holders. It didn't so what are you referring to?

  4. The vast majority of people I talk to have an amazing array of reasons (excuses) for not prepping. Ranging from I can't afford it to I don't want to think about it to you are just a pessimist. They don't want to face reality and they don't want to reallocate the money from new stuff and entertainment for themselves or their children.
    I guess it is important to keep informing people as best I can, but like Peter on this blog, I'm preaching to the already converted or the intentionally deaf.
    The ones that really drive me crazy are the ones that say they have land and a cabin many miles away in the roaring wilderness. They will chop wood and hunt to survive. Given their age and general health, they obviously have no idea how much wood will be needed. Shooting one deer a year isn't training for subsistence hunting. More importantly how are you going to get there. Anyone who has seen the evacuations for disasters like hurricanes has seen the utter chaos when everybody decides it is time to go and that is when the disaster is limited in scope. Will you be able to find clear roads and get sufficient fuel? How many opportunistic criminals will you have to get passed? Will you be able to deal with the groups that will see an isolated cabin as an opportunity?
    These kind of questions get me labeled as annoying.
    I think that the reachable have already been reached, the next level of the game will come when those who waken too late try to gather what little resources they can. The wise will have prepared and faded into the woodwork by then.

  5. My part time gig to supplement my retirement is contacting delinquent mortgagees in person. In the past two months it has become nearly full time.

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