Credit Card companies expected to make massive cuts

http://uk.reuters.co...ualBrandChannel=0

The new credit-card rules approved by U.S. regulators to curb unfair practices will reduce liquidity at a time when consumers need it the most, and in turn impact consumer spending, prominent banking analyst Meredith Whitney said.

"The regulators believe they are actually doing what is best for the consumer... we argue that the unintended consequences of such actions will at least do a commensurate amount of harm to the economy by stifling consumer spending," the Oppenheimer & Co analyst wrote in a note to clients.

The analyst expects lenders to pull back well over $2 trillion of lines over the next 18 months as a result of risk aversion, funding challenges and the just finalized regulatory changes.

This means available consumer liquidity in the form of credit card lines is expected to decline by 45 percent over the same period, Whitney said.

If it does end up cutting 50% of the credit from the market, it could have a bad short term impact. But in the long run, I think it's a good thing, people use way to much credit.

Jay

Post #301,287 by jay 12/19/08 4:33:22 PM Reply	Credit Card companies expected to make massive cuts http://uk.reuters.co...ualBrandChannel=0 The new credit-card rules approved by U.S. regulators to curb unfair practices will reduce liquidity at a time when consumers need it the most, and in turn impact consumer spending, prominent banking analyst Meredith Whitney said. "The regulators believe they are actually doing what is best for the consumer... we argue that the unintended consequences of such actions will at least do a commensurate amount of harm to the economy by stifling consumer spending," the Oppenheimer & Co analyst wrote in a note to clients. The analyst expects lenders to pull back well over $2 trillion of lines over the next 18 months as a result of risk aversion, funding challenges and the just finalized regulatory changes. This means available consumer liquidity in the form of credit card lines is expected to decline by 45 percent over the same period, Whitney said. If it does end up cutting 50% of the credit from the market, it could have a bad short term impact. But in the long run, I think it's a good thing, people use way to much credit. Jay
Post #301,289 by beepster 12/19/08 6:19:40 PM Reply	Painful early, way better for us in long run. I will choose a path that's clear. I will choose freewill.
Post #301,291 by Another Scott 12/19/08 7:50:57 PM Reply	A world story. I'm not convinced by her comments. Let's see - a Reuters story about the US, written by someone in Bangalore, published in a UK newspaper. Whitney sounds like an interesting analyst according to Wikipedia (http://en.wikipedia..../Meredith_Whitney), but I think that if there are proper safeguards (and oversight) that that shouldn't be the outcome. She seems to be saying that ending plainly unfair and deceptive practices will hurt the people who are being deceived. Given what's happened over the last few months, I think she'll have to do better than that. But we'll see. Cheers, Scott.

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