| Quarterly bank earnings give us a window into how the big lenders are doing, as well as a chance to see how their customers are faring. Today, Paige Smith gives us the rundown. Plus: You can trace a lot of angst around earnings season to the legendary Jack Welch, and when you’re ready to get away from it all, try this ski resort. If this email was forwarded to you, click here to sign up. The biggest US banks announced their financial results over the past two days, and by all basic measures, they’re riding high. All of the giants—JPMorgan Chase, Wells Fargo, Bank of America, Morgan Stanley, Goldman Sachs Group and Citigroup—reported some sort of record earnings metric for the three months through September. Collectively, they pulled in billions of dollars of net income. Yet one insect-related comment sent ripples through the finance sector. JPMorgan Chief Executive Officer Jamie Dimon told Wall Street that he’s on the lookout for cockroaches. These days, the largest US banks rarely, if ever, give loans directly to customers on the lower end of the credit-score spectrum, but they do lend to firms known as nonbank financial institutions, and those companies may very well count subprime borrowers among their customers. Such was the case for JPMorgan—the biggest bank in the country—and that’s where Dimon found his first pest. JPMorgan worked with the subprime auto lender Tricolor Holdings and was forced to report a $170 million charge-off after the Dallas-based company went bankrupt. “I probably shouldn’t say this, but when you see one cockroach, there are probably more,” Dimon told analysts on a conference call yesterday. “Everyone should be forewarned on this one.”  Dimon. Photograph: Bloomberg Dimon’s company wasn’t alone: Barclays and Fifth Third Bancorp also reported exposure to Tricolor through warehouse lending—loans to other lenders, that is—while UBS disclosed its vulnerability to First Brands Group, an auto-parts company that also filed for bankruptcy last month. Bank of America is part of a First Brands loan, too, but “we feel pretty good about our position there” given BofA’s seniority in the pecking order, finance chief Alastair Borthwick told reporters today. For now, it seems, the pain is isolated to those idiosyncratic cracks in the market, and a broader collapse in consumer finance doesn’t seem to be looming. After all, the financial pain of less-affluent consumers isn’t anything new. It’s a demographic that’s long struggled with high costs of living, including pricey automobiles, even if they’re still collecting a paycheck. And in the red-hot corner of private credit—lenders that aren’t traditional banks—the major players would like to keep stoking the fires. Marc Lipschultz, co-CEO of asset manager Blue Owl Capital, derided Dimon’s comments and hinted that perhaps it’s JPMorgan that actually has a bug problem. “I guess he’s saying there might be a lot more cockroaches at JPMorgan. I’m not sure I know what he’s saying,” Lipschultz said at a conference yesterday. “It’s not a private credit issue. It’s a liquid credit market.” In short, anyone doing a checkup on the financial health of the American consumer is getting some pretty mixed messages. Unemployment remains relatively low, people are still splurging on $895 Amex Platinum credit cards, and spending generally remains resilient. But there’s Dimon’s warning, even if it may be overblown. As JPMorgan finance chief Jeremy Barnum said, “The fact that things are fine now doesn’t mean they’re guaranteed to be great forever.” | 
