Bankers Bet Jobs on a Roaring V-Shaped Recovery: David Reilly


July 24 (Bloomberg) — The country’s biggest banks are doubling down on a bet that the economy will improve in the latter half of the year. If they’re wrong, and borrowers don’t pull out of a tailspin, bankers and their investors will take a beating.

That’s because banks will have to rebuild diminishing reserves that they set aside for soured loans, which results in charges that lower profit.

Signs that big banks are hoping to draw the equivalent of an inside straight on an economic rebound emerged in second- quarter results. Figures from the country’s seven largest commercial banks by assets, including banks like Wells Fargo & Co. and Bank of America Corp., show they went easy on increasing loan-loss reserves in the quarter.

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