"Credit Card Debt"
"The Federal Reserve reported late Wednesday that revolving debt, mostly credit cards, dipped at an annual rate of 13.1 percent in August. Almost $10 billion in outstanding credit card accounts were wiped off of banks' books in the month. Both numbers are among the highest ever reported for a month."
Bernanke says the Recessions Over... Over For Who? I say he is being very misleading but it's for a good reason. As far as the recession being over, the Fed reports that credit card debt is down. The # 1 contributing factor is consumer frugality. "Chargeoffs a key Driver in Declining Credit Card balances" What it really means is that banks are selling off record amounts of bad credit card debt to clean up their books. This looks good for their books which is what the fed's numbers are based on but we all know the "bad debt” has only changed hands. Out of sight and regulation by the fed, but still unresolved.
"Too Big To Fail"
The largest institutions are now married to Uncle Sam, whether either partner likes it or not. Certain of these marriages ( Citi and B of A ) are more formal while the balances are more "friends with benefits."
What about the small fry banks struggling with loan books that continue to bleed money but without the capital market activities to generate the gift-like earnings supported by the totally accomodative federal Reserve? What does the future hold for these institutions?
There is a lot going on behind closed doors right now between goverment and the financial industry. Sheila Bair fights to end the "Too Big To Fail" while many other officials fight to help those who helped them in past elections. Its dirty and its wrong how the American people are left holding the buck when everything rolls out in the years to come. Which ever way the chips fall it will be good for our industry. Read more in our blog or contact us for a free subscription to our news letter "Knight Financial News"
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