CNBC Daily Open: Bad loans by regional banks should concern us all

When you can't repay a slope loan, that's distressing — but astir apt not for the bank.

But erstwhile tens of thousands of people, who had bully recognition ratings, can't, it raises concerns astir the wellness of the economy.

And erstwhile it's companies defaulting connected precise large loans, starring to charges — that is, wealth the slope writes disconnected arsenic a nonaccomplishment due to the fact that it has fixed up connected recovering it — and bankruptcies, it's clip for everyone to enactment connected their detective hats.

Both First Brands, an car parts manufacturer, and car dealership Tricolor Holdings filed for bankruptcy successful September. Major banks specified arsenic Jefferies, UBS and JPMorgan had exposure to either of the 2 companies.

"Questions are present being asked astir however the demise of a comparatively chartless car parts supplier has dispersed crossed the planetary banking and money absorption industry, wherever perchance billions of dollars are entangled successful the collapse," wrote CNBC's Hugh Leask.

The worries intensified Thursday stateside erstwhile 2 U.S. determination banks raised issues with their loans.

All of the supra could beryllium isolated incidents unrelated to each other.

But "when you spot 1 cockroach, determination are astir apt more," JPMorgan CEO Jamie Dimon said connected the bank's net league telephone earlier this week.

And rotten loans bash not enactment wrong the banking sector. The 2008 planetary fiscal situation — which caused millions to beryllium laid off and economies to descend into a recession — was successful portion triggered by the subprime owe crisis, successful which, precise simply put, radical couldn't wage for their mortgages.

Then, the cockroaches ran free.

Bank indebtedness worries marque it easier for Fed to chopped involvement rates, Jim Cramer says

As quality of sour banks loans rattled Wall Street, CNBC's Jim Cramer said the developments volition pave the mode for the Federal Reserve to little involvement rates — a determination that investors crossed the committee person been hoping for.

"Today got existent ugly, but astatine slightest we yet person thing that tin marque the Federal Reserve itchy to chopped involvement rates sooner alternatively than later: slope loans gone bad," helium said. "Nothing motivates the Fed to determination faster than recognition losses, due to the fact that they're a definitive motion that the system is going south."

— Julie Coleman