Category Archives: Credit cards

Credit Card Defaults Stabilizing?

Reuters reports that a number of credit card issuers reported modest improvement in their chargeoff rates for July. While any improvement is good news, it is way too early to break out the champagne. First, some of the improvement may be related to tax refunds being used to pay down debt, a strictly seasonal affair. […]

Freddie, Fannie to Provide 125% LTV Mortgages, Worse Than Extremes of Subprime Frenzy

If you had any doubt that the intent of policy, such as the heroic efforts by the Fed to channel money to the mortgage market my manipulating spreads of mortgage paper so as to lower borrowing costs, was not merely to clear inventory but boost prices, today’s action should put your mind at rest. The […]

Comic Relief: "Where Credit is Due"

In a bit of synchornicity, we had two posts on credit cards yesterday. Lo and behold, Versus released a new song parody on the joys of plastic:

Banks Rescue Credit Card Trusts, Yet Keep Them Off Balance Sheet

America as banana republic is alive and well. Tonight’s version is that anything that helps banks is permitted, official rules to the contrary. Banks enjoyed lots of fun and profit from setting up various off balance sheet vehicles that are now coming a cropper. We saw the preview of this movie with structured investment vehicles, […]

Credit Card Chargeoffs Rise to Over 10%

Wow, the credit loss numbers keep getting worse and worse. And although a lot of observers like to attribute banks slashing credit lines and jacking up rates to pending pro-consumer rule changes, the more obvious culprit is their hemorrhaging portfolios. Banks tend to close the credit gate after the horse is in the next county, […]

Credit Card Squeeze Hits Small Businesses

We’ve written off and on since late last year that the continuing cutbacks in credit cards would hurt small businesses, which have been the biggest source of job creation in the US for quite a stretch. The importance of credit cards as a source of funding to small companies has gone largely unnoticed in the […]

JP Morgan Says Losses on WaMu Credit Cards Could Reach 24%

Folks, 24% is a simply breathtaking number for credit card losses, and JP Morgan is saying that is what it may see on its WaMu portfolio. Even keeling-over-and-dying Advanta is up to only 20% losses. Jamie Dimon, JPMorgan Chase chief executive, warned on Wednesday that loss rates on the credit card loans of Washington Mutual, […]

Idea of Consumer Financial Products Watchdog Gaining Traction

Elizabeth Warren, head of the Congressional Oversight Panel for the TARP, has been a vocal advocate for the need for a financial product safety commission. The notion, which seemed quixotic a few weeks ago, is getting consideration by the Obama Administration. Given how industry friendly Team Obama’s financial services industry measures have been, it runs […]

Advanta, With 20% Uncollectable Debt, to Shut Off Lending

Advante, the 12th biggest credit card issuer, is ceasing all new lending as of June 10. This is yet another example of how the credit contraction is hitting small businesses. Since the credit card industry is highly concentrated, Advanta is pretty small fry, with only $5 billion in outstanding credit. But that was devoted entirely […]

Capital One Reveals Big Increase in Credit Card Chargeoffs

The report by Capital One on a marked increase in credit card chargeoffs to an eyepopping 9.33% is more significant than it might seem. First, the absolute number is simply a stunner in an economy where unemployment is far from peaking. Second, Capital One was widely regarded in the industry as a savvy credit card […]

2005 Bankruptcy Law Changes Have Worked to Detriment of Credit Card Companies

The irony is rich, even if the consequences to both credit card issuers and borrowers are painful. Many readers no doubt know that the October 2005 bankruptcy law changes were a long sought, hard lobbied for win for credit card companies. It considerably restricted access to Chapter 7 bankruptcies which allow borrowers discharge the debt […]

Credit Card Delinquencies Reach Record Level

Like sports achievements, I have no doubt this so-called record will be broken soon, and in short order. From the Financial Times: US credit card delinquencies hit a record high in January, and further deterioration is likely as the economy slows down and unemployment rises, Fitch Ratings says. Payments at least 60 days late rose […]

Chase Behaving Badly: Unintended Consequences of the Fed’s New Credit Card Rules

In late December, banking regulators agreed to new rules to limit actions by credit card issuers that consumer advocates deemed to be abusive. While the new rules do not take effect until July 2010, regulators claim they will press banks to comply earlier (see here for a summary of the main provisions). Experts argued that […]

Banks Supposedly Will Cut Consumer Credit Card Lines by $931 Billion if Reforms Mandated

There is a rather amusing story at the Financial Times tonight, “Credit card reforms ‘to cost banks billions’”. Let’s look at the particulars. The story is based on a study by law firm Morrison & Forester which concluded that banks will suffer a world of hurt if they are forced to give up practices like […]