Monetary Matters with Jack Farley The Financial Sector Prepares for Recession | Marc Rubinstein
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Apr 27, 2025 AI Snips
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Banks Preload Loan Loss Provisions
- Banks have shifted to loading loan loss provisions in advance due to accounting changes since 2008.
- They now weight downside recession scenarios heavily to prepare for economic stress.
Banks Cautiously Reserve Amid Regulations
- Banks reserve only what they have high confidence in to avoid SEC accusations of earnings manipulation.
- This cautious approach limits their upfront provisioning despite recession risks.
Trade-Centric Banks Face Tariff Risks
- Banks that facilitate global trade like Standard Chartered and HSBC face second-order risks from tariff-induced trade declines.
- Their business models depend heavily on maintaining global trade corridors.