Wealth-management loans at Bank of America increased by 12% from a year earlier to US$222 billion, beating a 4% growth in the bank’s consumer segment.
Although among a richer portion, the growth is just another indication that Americans aren’t being defensive in anticipation of a crisis.
The CEOs of the top U.S. banks stated in earnings calls earlier this month that their clients are spending at a healthy rate and making their loan payments on time without depleting their bank accounts.
According to Mike Kosnitzky, co-head of the private-wealth practice at law firm Pillsbury Winthrop Shaw Pittman LLP, the wealthy are using their securities-backed credit lines to buy assets that appear inexpensive in the current volatile markets.
Rich families piled on cheap debt during the more than ten years of historically low interest rates. They received a stream of money from loans that prevented them from selling assets and incurring hefty tax liabilities.
