Regional lender Fifth Third expects up to $200 million in impairments tied to alleged fraud at Tricolor, according to Bloomberg.
Credit metrics at JPMorgan, including early-stage delinquencies, remain stable and “actually better than expected,” Barnum said. However, the bank is closely monitoring the labor market for signs of weakness that could spill into consumer credit, including mortgages.
Potential tightening of credit standards
When high-profile bankruptcies and charge-offs emerge in one lending segment, banks and non-bank lenders often reassess risk across their entire portfolios.
“When you see one cockroach, there are probably more. Everyone should be forewarned on this one,” Dimon said, suggesting that hidden risks may exist elsewhere.
For mortgage lenders, this could mean a more cautious approach to underwriting, with stricter verification of borrower income, employment, and creditworthiness. Lenders may also revisit risk models and stress-test portfolios for resilience against economic shocks.