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JPMorgan Books $170 Million Tricolor Loss as Dimon Warns of More Credit 'Cockroaches'

Wall Street leaders describe the failures as isolated pockets of stress despite ongoing DOJ probes.

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Signage is seen at the United States Bankruptcy Court for the Southern District of New York in Manhattan, New York City, U.S., August 24, 2020. REUTERS/Andrew Kelly/File Photo
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A specialist trader works at the post where BlackRock is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 21, 2022. REUTERS/Brendan McDermid/File Photo

Overview

  • JPMorgan recorded a $170 million Q3 charge-off tied to subprime auto lender Tricolor, with CEO Jamie Dimon calling it “not our finest moment” and pledging reviews of underwriting and controls.
  • Tricolor’s Chapter 7 left about 60 lots and roughly 10,000 vehicles unsecured across six states, with reports of missing cars complicating collateral recovery for creditors including Fifth Third and Barclays.
  • First Brands’ bankruptcy has triggered a DOJ investigation and creditor claims that $2.0 billion to $2.3 billion in invoice payments are unaccounted for, with exposures disclosed by Jefferies and UBS.
  • Dimon said the collapses are early signs of excess after a long credit bull market and cautioned that a downturn could reveal more problems, while CFO Jeremy Barnum stressed most NDFI lending is highly secured.
  • BlackRock’s CFO said the stress appears idiosyncratic rather than broad-based, and executives at Goldman Sachs and Citi highlighted diversified, investment-grade lending as private credit firms pushed back that banks led the troubled deals.