JPMorgan, Wells Fargo Offer Reality Check on Profit Outlook (1)

With the biggest U.S. banks facing an unprecedented economic standstill and new accounting rules, most analysts expected them to double what they set aside for bad loans a year ago.

Those predictions weren’t nearly pessimistic enough.

Both JPMorgan Chase & Co. and Wells Fargo & Co. posted their highest loan-loss provisions in a decade, setting aside more than $12 billion to cover defaults across the economy, but especially from credit-card borrowers and oil companies. Banks faced criticism in the last crisis for being slow to recognize the coming pain, and Tuesday’s results show they intend to avoid that this time. ...