Big banks in the US are facing a major financial headache: customers are struggling to pay back their loans.
Big Losses for Big Banks
Bank of America, Citigroup, and Goldman Sachs have all reported billions of dollars in losses due to unpaid debts. Citigroup, for example, saw a whopping $2.28 billion in bad debts in the second quarter of this year. That’s a huge jump from the $1.5 billion they lost in the same period last year.
Consumers Cutting Back
Citigroup CEO Jane Fraser says she’s seeing signs that regular Americans are starting to tighten their belts. She says that a lot of the spending growth is coming from wealthy customers, while everyday people are cutting back.
Other Banks Feeling the Pinch
It’s not just the big three. JPMorgan Chase lost $2.2 billion in the last quarter due to unpaid debts, while Wells Fargo lost $1.3 billion.
Debt Levels Rising
The Federal Reserve Bank of New York is sounding the alarm about rising household debt. They say that US household debt reached a record $17.69 trillion in the first quarter of this year. That’s a huge increase from the previous year.
What’s Next?
It remains to be seen how long this trend of rising unpaid debts will continue. But it’s clear that banks are facing a challenging environment.
