Banks to pull $2 trillion in credit cards lending?
December 1, 2008 | alternatives, industry | Comments (0)This is quite a news item:
There is something to be said for giving nearly everyone a lot of access to credit when the economy and real estate values are improving. If consumers don’t have a ready way to find cash to pay down card balances because their wages are not improving, they can always tap into the value of their homes.
Banks made good money off the interest rates they charge and GDP expansion kept default rates down to a dull roar.
The period in which the average citizen has no access to credit at all may be upon us. According to Reuters, “The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.” Whitney is known for her remarkable pessimism. She is also known for being right.
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