Credit Card Delinquencies, Chargeoffs Rise Again; Bank of America Has Credit Card Headaches

[girl gone mad]

From http://globaleconomicanalysis.blogspot.com/">Mish:

Given there has been a financial recovery of sorts, but no recovery at all on main street, it should not be surprising to see http://online.wsj.com/article/SB10001424052748703510304574626022292779340.html">Credit-Card Delinquencies Rise Again.

The rate of charge-offs on U.S. credit cards rose more than a half-percentage point in November, snapping a two-month run of drops from an all-time high in August, and delinquencies rose for the fourth consecutive month, Moody's Investors Service said.

Charge-offs, which are those loans a credit-card company doesn't think it will be able to collect, were 10.6% for November, compared with 10% in October. The ratings firm also said the delinquency rate, which gives a glimpse of issuers' potential losses and how much they may need to set aside in reserves, rose to 6.2% in November.

Bank of America Now Choking on Growth at any Cost Policy

Please consider http://online.wsj.com/article/SB10001424052748704718204574616454256403772.html?mod=WSJ_hpp_sections_personalfinance">New Chief at Bank of America Seeks Credit-Card Fix

When Bank of America Corp.'s new chief executive takes over next week, one of the first problems he will face is one he's already been grappling with—the bank's credit-card business.

"We gave a lot of cards out to our customers," Mr. Moynihan said in a Nov. 5 speech. "We were giving them to too many people." He discussed a "repositioning" of the business that would rely less on borrowing and more on card transactions, while acknowledging that the business won't be as big or as profitable as it used to be.

http://online.wsj.com/article/SB10001424052748704718204574616454256403772.html?mod=WSJ_hpp_sections_personalfinance">More...

Assets at Banks whose ALLL (allowance for loans and lease losses) exceeds their Nonperforming Loans

[marmar]

1. The Bank loansharks will just take it out on their paying customers....

nt

[Hawkowl]

2. Shouldn't rape your customers at 30% interest

There delinquencies and defaults are going to get a hell of a lot higher if they continue to insist on ripping people off with usurious interest rates and bogus fees.

If everyone pulled their deposits out of BOA and put them into local community banks and credit unions, the economy and financial crisis would probably solve itself.

[Tansy_Gold]

3. I have a solution, but no one will like it

1. Put a cap of $500,000 on executive salaries. No bonuses, no stock options. Let them live like "normal" people for a change. That will cut the need for outrageous profits, too.

2. Cut interest rates on credit cards to 10% across the board (rates below 10% should remain where they are; don't raise them).

3. Leave late fees where they are, even if they're somewhat outrageous; don't raise them however.

4. Set minimum payments of monthly interest plus $10. It may not be much on the principal but it will allow people to work on paying the balance down and keep payments current more easily than having to cover a percentage of the balance every month.

5. Grant no new credit to any card account that is more than 60 days delinquent until that account is brought current and remains current for six consecutive months.


The banks won't make as much money as they did, but consumers will be better off in the long run. And I'm not gonna side with the banks.


Tansy Gold