Bank of America_ American Express_ Others_ May Suffer On Card Defaults

These are the kinds of stories that I like to read. Bloomberg’s big-picture story is informative. Card issuers are — seemingly — doing some strange things out there to customers. Rates are soaring, limits are being pulled in, etc. When you read the story I pointed to yesterday (here) and you read this Bloomberg story, card-issuer behavior doesn’t seem so strange after all. From Bloomberg:Charge-offs may reach the “mid-teens” in a worst-case scenario, Moody’s Investors Service analysts led by William Black said in a Feb. 4 note. Issuers would have to bolster their securities to prevent them from hitting early payment-triggers and lower-rated securities could be downgraded, Moody’s said.Sustained defaults at 10 percent could force a major issuer to seek a rescue or sell its credit-card division, said David Robertson, president of the Nilson Report, the Carpinteria, California-based trade newsletter.“There’s never been a lender of that scale in this predicament,” Robertson said in an interview. “Portfolios that have been required to sell themselves to a lender because they’ve gone underwater have been far smaller.”