Free Republic

"...While the banks might be fine, some cash-strapped and credit-abusing consumers clearly are not. The idea that JPM is building reserves to cushion themselves against bad loans amid rapidly increasing charge-offs tells you all you need to know. Similar story at Bank of America (BAC), who also increased reserves. Across the nation’s four biggest banks, consumer loan charge-offs increased 73% in Q1, as they wrote off $3.4 billion in bad debt during the first three months of the year. "

As those who frequent these pages are no doubt aware, NPLs at Chinese banks are rising. Here’s a kind of 30,000 -foot view from RBS’ Alberto Gallo:As we documented last month after data on new RMB loans showed that the credit impulse in China simply rolled over and died in October, part of the problem is that banks are becoming increasingly concerned about sour loans, as an acute overcapacity problem, a decelerating economy, and sluggish global growth and trade have conspired to create an environment in which borrowers are now taking on more debt just to service the loans...

When they moved into the house in November 2005, Kofi was earning $82,740 as an IT consultant for a government contractor, and Comfort, then 43, was making $30,000 as an administrative assistant. But in the overheated mortgage market of the time, they said everyone told them that they could buy a $600,000 house. They made a $60,000 down payment and all their mortgage payments for more than 2½ years — through September 2008. But the house was financed with subprime loans, which reset to higher rates after short time periods, creating what are known as “shock payments.” The Boatengs said...

Washington persists in postponing the bad-debt reckoning, strangling consumption and killing jobs.Four years ago this fall, President George W. Bush’s Treasury department tried to create a “Super Structured Investment Vehicle” to buy up some troublesome financial instruments that few people at the time had heard of. The “Super SIV” marked the start of a financial-crisis strategy that Washington continues to pursue: pretending that bad debt is worth more than it is. This now bipartisan strategy has taken a massive toll, the latest evidence of which is the news that the country created only 18,000 jobs in June—less than 1 percent...

On Nov. 23, the China Banking Regulatory Commission, Beijing's bank regulator, ordered Chinese lenders to formulate long-term fundraising plans. Those banks with "relatively low" capital adequacy ratios and without "practical" plans would face restrictions on further growth relating to market entry, outbound investment, new branches and "business expansion." Chinese investors were rattled. On the following day, the Shanghai Composite Index plunged 3.45% on record turnover. Shares of the four largest Mainland banks listed in Hong Kong were down as well. Bank of China fell about 4%. Bank of China, one of the so-called Big Four banks, increased its loan book...