Rising Credit Card Losses Are Next Challenge for Banks »
Posted By deathray 6 months, 1 week ago in Business & Finance
It used to be easy to guess how many Americans would have problems paying their credit card bills. Banks just looked at unemployment: Fewer jobs meant more trouble ahead.
Read Full Story at nytimes.com »
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deathray
Hm...summarizing a life...Investment banker, sailor, unintentional gourmet cook. Ex US Naval officer, also Foreign Service. Split my time between NYC and Miami Beach ...
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deathray6 months, 1 week ago
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fta:
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"Experts predict that millions of Americans will not be able to pay off their debts, leaving a gaping hole at ailing banks still trying to recover from the housing bust.
The bank stress test results, released Thursday, suggested that the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called a “worst-case” economic situation."
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not2needy6 months, 1 week ago
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That wasn't very encouraging, and makes me very glad that i don't have that much credit card debt. I have a few little credit cards, have paid off one, and getting ready to pay off another.. It feels good to get them out of the way, and free up income!
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That said, Discover and Capital One are about to aggravate me to death, trying to give me cards i don't want.-
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AnteUp6 months, 1 week ago
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Your comment made me realize that after a long time of being bombarded with
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offers to take out a new card - sometimes several offers a day! - I haven't received
any lately. What I have been getting are CHECKS from my existing card issuers -
"Use these for whatever you want" - ahem, at a much higher interest rate than a
charge purchase. My response has been shred - shred - shred!
Luckily I haven't HAD to - but think of those who might need to? And I do mean
NEED, not want...................you can get your car repaired, or have dental work
done, or go to see a physician - but at quite a price.
Debt - the gift that just keeps on giving! -
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Will13136 months, 1 week ago
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just a word of advise..
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don't cancel cards that you have paid.. put a small manageable balance back on them so they cannot cancel it either....
it LOWERS your credit scores.... and forces up rates on other cards..
cancelled cards no matter whether you or the card company cancel are negatives...
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engineer6 months, 1 week ago
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The banks caused this through their lending recklessness and greed. The outsourcing of jobs, especially by big business, is the other cause. If we send all the money and the jobs out of the US, we will have nothing to offer. The banks caused people to have less disposable income due to lending to people who couldn't afford the credit line and by charging organized crime interest (extortion) rates and obscene fees. I have no sympathy for these monsters. They should be closed down and their executives fired and if possible be locked up as Bernie Madoff was!!
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dgoodii6 months, 1 week ago
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Not to mention, the price of every single item sold by a retailer who takes credit is inflated a few percent to cover costs of credit. They don/t just stick it to the card holder they stick to the retailer for the privilege of use. So even when we pay cash it cost more.
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nostalgia6 months, 1 week ago
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There are more problems coming in addition to credit card debt
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Commercial real estate fears for regionals
The Federal Reserve’s stress-test estimate that 19 leading US banks could face losses of $53bn on commercial real estate assets is raising fears that many smaller banks could be facing big losses on their loans to the sector.
Experts anticipate that commercial real estate prices will drop another 20 per cent – on top of the 30 per cent drop so far. “There are two revaluations going on,” said Michael Pralle, a veteran real estate investor. “The risk premium is going up, the cost of debt is going up and the amount of leverage available is coming down.”
The Fed predicts that under a “more adverse scenario” for the US economy, the 19 banks that it subjected to stress tests could lose a combined $53bn, or 8.5 per cent, of the $600bn or so of commercial real estate assets on their books.
According to the Fed, the 19 banks differ considerably in their exposure to commercial real estate. For example, it said, Regions Financial, an Alabama-based regional bank with $146bn in assets, faces potential commercial real estate losses of $4.9bn, or 13.7 per cent, of its total loans to the sector.
http://www.ft.com/cms/s/0/7fab4a44-3bf8-11de-acbc-...
And Business Week May 4, 2009 reports:
Housing Rebound? Not So Fast
Rising home-sales figures excite Wall Street, but there are plenty of reasons to hold the confetti for now
At the Milken Institute's Global Conference last week in Los Angeles, leveraged-buyout king Thomas Lee pointed to a slide showing the large number of "Alt-a" adjustable-rate loans due to reset in coming months. These loans—made to buyers with decent credit but who were required to show less documentation of their income—could default in larger numbers, to the extent that they reset at higher rates.
Donald Brownstein, chief investment officer for money manager Structured Portfolio Management, told Milken conference attendees that his internal calculations show home prices have to fall about 40% off their peak before hitting bottom. The latest Standard & Poors/Case-Shiller home price index numbers showed a 30% decline from the peak in the summer of 2006, meaning we still may have a ways to go. -
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Poulenc6 months, 1 week ago
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My concern for bank losses is tempered by my, well, hatred of the usurious practices of credit card issuers--for example, interest rates rates that balloon capriciously.
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If ever an industry needed regulation, the credit card cabal is one. -
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bgamall6 months, 1 week ago
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The off balance sheet banking scam will really hurt these companies. However, it is not a consumer problem if the banks cannot sell the crap cc bonds. They are still loan sharking us. I say, walk away from your credit card debt and weaken these banks.
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http://www.dontpaycreditcards.com -
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joeblowe6 months, 1 week ago
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And then - the idiot banks make their own problems WORSE by arbitrarily raising rates and fees on their customers who DO pay their bills. Sometimes, it seems very apparent that most banks are run by greedy simpletons who haven't got a clue how to get their customers to WANT to repay them. (here's a hint: screwing them over every chance is NOT correct)
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BigBadJohn6666 months, 1 week ago
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Credit card companies are as big a thieves as you can get. They loan people money at certain rate and then later they raise he rate way up for no reason. There used to be a loan shark law that sent anyone that charged more than 10% interest to prison. What happened to that law? I know a guy that had some credit cards and always paid way more than the minimum payment and was never late. All of a sudden they raised their normally high rate up to 29%. He did what everyone should do. He told the crooked SOBs to get F@$# and took Bankruptcy on them. They then got what they deserved, NOTHING.
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These title loan places are big crooks also. They should all be shut down and the owners and employees should all be sent to prison.-
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Georgia506 months, 1 week ago
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Credit card issuers do not win by destroying their base. They win by cultivating their base.
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There are two reasons to increase risk that come to mind: 1) a borrower represents greater risk, and 2) the market will bear a higher rate.
Either way, there are justifications for increasing interest rates. Anyone who objects can and should rip up their cards and walk away.
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