Douglas Elliott has been warning us that the big trouble for banks these days is not so much the exotic and toxic assets but from defaults on workaday loans to businesses.
Now one of the credit card bigs is shutting down accounts. Advanta, which provides cards for small businesses, will close off accounts for its million customers in June. Bloomberg reports the company faced uncollectible debt on some lines of 20 percent.
"Advanta's a nationally visible brand," one credit card executive told Philly.com. "It's going to be seen as a leading indicator. The first one to fall."
Calculated Risk notes that the Federal Reserve looked for losses of 18 to 20 percent for consumer credit cards -- ordinary folks who run up more debt than they can pay. "Advanta is seeing that in one year for some cards!" -- and it's the businesses that are having trouble paying.
categories: News
Comments
Please note that all comments must adhere to the NPR.org discussion rules and terms of use. See also the Community FAQ.
You must be logged in to leave a comment. Login | Register
More information needed to participate in the NPR online community.. Add this information