November 13, 2008

• News:  Stroke, stroke, stroke; bail, bail, bail: 'No, no, no.'

  
  The credit catastrophes seem endless…and probably are. Credit card debt is not headline news yet, never is till a moment after explosion. Some prophets in the know, however, are feeling what it's like to not get due credence when too close to home (not a pun but, both meanings intended). Notice how housing lending didn't dominate the front page until moments after the explosion. This may be the same case with credit card lending. Warnings of the nearing 40% increase of the default rate on credit card repayment has been foretold for some time now but is far from being front-page news. The enormous pressures are already in place and the supporting beam is buckling...but it hasn't snapped yet. Or, at least, some say.

  This is what the banking industry and several other security and regulation agencies are saying, concerning credit card lending. This was made light of when Mr. McCain proposed we deregulate health care after the successful banking model. When observers suggested this might have results like the housing market, McCain's senior adviser, Douglas Holtz-Eakin, labeled these allegations as ‘absurd'. He alleged that the only change from deregulating the banking industry was the convenient use of ATM cards. He claimed that experts had taken the ‘deregulation' factor out of context. "That crisis arose from corruption and regulators asleep at the switch," Mr. Holtz-Eakin stated. Let the reader decide the context over the next few weeks. Expect to see more and more front-page news concerning a possible credit card market meltdown from poorly regulated lending in this area next.

  The news today the warning of a foreboding wave (tsunami?) closely following the one which just engulfed our nation and, has yet to begin receding. Credit card defaults are skyrocketing. Diverse alliances are forming. Self-labeled as a "major player on Capitol Hill and with the regulators", the alliance of the ‘Financial Services Roundtable' and the 'Consumer Federation of America' is requesting of the government to bail out the banking, insurance, investment and securities industries. They are requesting bending tax rules to allow writing off "as much as 40 percent of credit card debt to be forgiven for consumers who don't qualify for existing repayment plans." Right now, the government is basically saying "No."
  
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