U.S.-based banks reported total profits of $18 billion in the second quarter, 70% less than in the first, according to the FDIC. While the highly publicized earnings reports of the “big six” Wall Street banks, even with Wells Fargo’s $2.4 billion loss, were $17 billion, the 5,000 small and community banks just about broke even for the quarter, as commercial and industrial lending fell despite the Payroll Protection Program loans. By contrast, the five largest Chinese commercial banks — Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications — just posted their first-half (not first-quarter) earnings, and they totaled less than $10 billion. This indicates that regulators required them to set aside much more substantial — actually adequate — loan-loss reserves against bad loans in the crisis.
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Wall Street Banks' Loan-Loss Reserves Too Small for Crisis
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