Major U.S. Banks Struggle with Credit Card Debts

JPMorgan Chase and Wells Fargo are grappling with significant credit card debt issues. JPMorgan has over $500 million in bad mortgage debt despite making a $13.1 billion profit.

Wells Fargo’s debt has surged by 70%, with net charge-offs rising from $764 million in Q2 2023 to $1.3 billion last quarter. These debts, originating during the COVID-19 pandemic, are now considered unpayable, reflecting the broader economic strain and rising interest rates that have burdened many borrowers.

The roots of these debts trace back to the financial disruptions caused by the COVID-19 pandemic, which saw the Federal Reserve intervening with various measures. Despite these interventions, the economic recovery has been uneven, leading to increased interest rates and job market instability.

These factors have compounded financial pressures on borrowers, resulting in a significant portion of these loans becoming unpayable. While the banks are absorbing losses in their retail operations, they are compensating through other financial activities.

In response to these challenges, both JPMorgan Chase and Wells Fargo are diversifying their investment portfolios, including significant stakes in Bitcoin ETFs. JPMorgan has invested in BlackRock’s IBIT, Grayscale’s GBTC, and Fidelity’s FBTC, while Wells Fargo has a stake in ProShares Bitcoin Futures ETF.