Banks Lost Billions on Bad Loans Last Quarter: Kiplinger Economic Forecasts
Bank deposits are also down, and more people are tapping into their savings.

To help you understand what is going on in the banking and the financial sector and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
Loan losses are rising again at banks after reaching historically low levels. Lenders reported $19 billion in charge-offs — losses on loans that lenders deem unrecoverable — in the second quarter, the highest level in more than three years.
More than half of recent losses came from credit card lending, but CRE (commercial real estate) has also experienced a worrying rise in borrower defaults. Borrowers with variable-rate loans are now saddled with higher repayments, and landlords are struggling to rent out space in office buildings due to remote work.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
There are still several sources of strain on the U.S. financial sector. Funding costs and declining income weakened profitability in the second quarter. Banks have lost deposits for the past five quarters, as more folks tap into their savings. Banks are still using the Federal Reserve’s emergency lending programs. Loans from these Fed facilities have stayed above $100 billion since the first week of June, though borrowing has stabilized since a string of bank failures this spring.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
- Banks Tighten Lending Standards As Demand Wanes
- Banks Tighten Loan Criteria Following Mass Withdrawals: Kiplinger Economic Forecasts
- Are Your Bank Deposits Safe? What to Know
- WFH Impact on Commercial Real Estate Market: Kiplinger Economic Forecasts
- Three Considerations for Stashing Cash After Bank Failures
- How to Protect Your Cash and Investments in a Banking Crisis
- What Is the Federal Funds Rate?
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Rodrigo Sermeño covers the financial services, housing, small business, and cryptocurrency industries for The Kiplinger Letter. Before joining Kiplinger in 2014, he worked for several think tanks and non-profit organizations in Washington, D.C., including the New America Foundation, the Streit Council, and the Arca Foundation. Rodrigo graduated from George Mason University with a bachelor's degree in international affairs. He also holds a master's in public policy from George Mason University's Schar School of Policy and Government.
-
Walmart Deals Go Head-to-Head with Amazon Prime Day: Our Anti-Prime Picks
Walmart Deals runs through July 13, giving shoppers two extra days compared to Amazon Prime. Here are the best anti-Prime deals to consider.
-
Mom needs a nursing home. Should I spend down her assets so she qualifies for Medicaid?
We asked expert financial advisers for their advice.
-
AI’s Rapid Rise Sparks New Cyber Threats
The Kiplinger Letter Cybersecurity professionals are racing to ward off AI threats while also using AI tools to shore up defenses.
-
Blue Collar Workers Add AI to Their Toolboxes
The Kiplinger Letter AI can’t fix a leak or install lighting, but more and more tradespeople are adopting artificial intelligence for back-office work and other tasks.
-
Who Will Replace Jerome Powell as Fed Chair?
Buzz is building that President Trump could announce Fed Chair Powell's replacement sooner rather than later, even though his term doesn't end until next year.
-
June Fed Meeting: Updates and Commentary
The June Fed meeting was a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. have to say about interest rates and the economy.
-
America's Surprising Strengths in Manufacturing and Exports
The Kiplinger Letter Despite common perceptions that the U.S. doesn't build things anymore, American factories are still hard at work. A special report from The Kiplinger Letter.
-
Tax Rule Change Could See Millions Lose Health Insurance
The Kiplinger Tax Letter If current rules for the health premium tax credit (PTC), a popular Obamacare subsidy, aren't extended, 3.7 million people could lose their health insurance.
-
Travel Trends You Can Expect This Summer
The Kiplinger Letter Domestic trips will trump foreign travel amid economic uncertainties, though some costs are down.
-
AI Goes To School
The Kiplinger Letter Artificial intelligence is rapidly heading to K-12 classrooms nationwide. Expect tech companies to cash in on the fast-emerging trend.