Tuesday, Jan 22, 2008
Even American Express has a sudden and broad-based rise in delinquencies
Salt Lake Tribune: Mortgage crisis spills over into credit cards
No but it is all ok, really!
The luster on all those silver, gold and platinum credit cards is getting tarnished. For the past few years, banks that issue credit cards have aggressively wooed affluent customers with lavish perks and fat credit lines. Now, that high-end strategy is coming back to bite the banks. There are growing signs that some of those consumers are having a hard time paying their bills.
It is the latest in a series of woes for U.S. financial institutions, which are struggling to contain a series of credit-related problems after years of strong profits. Banks have lost billions of dollars from soured home loans and mortgage-related investments. And defaults on commercial and industrial loans could rise later this year if the economy weakens further.
2 Comments
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1. lvmreader said...
Welcome to the magical world of Credit Contagion.
It is a continuum, not a set of compartmentalised, discrete entities.
Executives at firms who claim that the MBS subrpime problems will not affect them are lying or clueless to the nature of connectivity in the financial markets.
2. drewster said...
LvmReader, another excellent post.
A borrower can be prime in boom times, yet sub-prime in bad times. This simple fact seems to have escaped all the lenders. The difficulties faced by American Express (amongst others) reflect this.