I'd like to see a proper tally of how much credit cared companies have slashed credit already.
-The Naked Capitalist
[Do read the rest, including the comments. It's pretty eye-popping and dovetails with some stories I've heard]
CARD COMPANIES IN FULL PANIC MODE, APPARENTLY
Well, out $350 billion dollars in TARP money sure isn't creating 'confidence' at the card companies, who are passing on their misdeeds in the form of ripping up lines and raising rates, further busting-up consumer confidence, no doubt, even for their best customers, reportedly.
Meredith was right, apparently...and again.
HEARINGS NEEDED - GLASS-STEAGALL LIKE REFORM ON THE TABLE
We can't have banks panicking the credit outlook, abetting a great "paradox of thrift" and compounding wealth declines with "an end to credit". They will create a steeper downturn that will, in turn, make things even worse for themselves.
In the longer-term, consider that consumer credit card companies need to be put into separately capitalized subsidiaries.
The implication that losses in the capital markets (on poorly made investments) should or would translate promptly into restrictive consumer credit is ... unwanted.
The fact that the Treasury is backstopping 'AAA' securitized card receivables, the Fed is providing cut-rate financing, the FDIC is providing debt-guarantees, and monetary policy has short-term rates near zero, suggests that rates on consumer credit should be plummeting.
WILL THERE BE A RUN-OFF IN BANK DEPOSITS?
The card companies are going to take a serious hit to their brand image. It's started already. On an ad-hoc basis, I've heard few people say things like, "my card companies are standing by me."
The question is, will that translate into deposit losses. Are consumers from Bank of America, etc., going to pull their checking and savings accounts, due to anger and frustration, moving them to local banks?
We'll see. There is a titanic struggle between fewer card companies (increased market power) and upset card holders ...
