Taps Coogan – April 21st, 2021

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Chris Whalen, Whalen Global Advisors Chairman and author of The Institutional Risk Analyst, recently had a wide ranging discussion with Real Vision about banks’ first quarter earnings, why banks are ‘running away from consumers,’ why he doesn’t think yield curve control is coming, and more.

Of particular relevance to our recent article ‘Want to Boost Bank Lending Ratios? Raise the Fed Funds Rate,’ Mr. Whalen warns that banks are “not originating new loans fast enough to keep up with the loans that are either being redeemed or prepaid…” He lays the blame at the feet of regulators which he says have strongly disincentivized banks from making loans to consumers that involve any credit risk, kneecapping banks’ ability to find good yielding loans (assets for the banks).

He also notes that the ‘blowout’ first quarter bank earnings are mostly the result of banks not having to take their loan loss provision put aside last year at the height of the pandemic. While that’s good news, it masks the fact that true year-over-year revenue at some of the biggest banks is actually declining and a lot of bad loans have simply been put on forbearance, kicking the can down the road.

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