Market looks overbought, overextended and overvalued (Comstock Partners)

It is safe to assume that CNBC,

Jim Cramer and Ben Bernanke share a

completely different perspective

about the market.

Comstock Partners, Inc.
Add'l Posts at Comstock Partners
12/16/10

After an 86 percent gain in 21 months the market looks overbought, overextended and overvalued. Furthermore, despite the implementaion of QE2 and the passage of the tax compromise, the economy is not likely to grow fast enough to to be self-sustaining.

Although the combination of QE2 and the White House/Congressional compromise on the tax extension issue is being touted as the great elixir that will spur economic growth we think that growth will be subdued and temporary. Indeed QE2 is already looking like a failure in its early stages. No matter what the "experts" say now, it was chrystal clear from the get-go that the Fed's intention was to lower long rates, not raise them. As it stands today the sharp rise in the 10-year Treasury bond is likely to further weaken an already dead housing market by enough to offset any additional growth that QE2 could have provided. Furthermore, the combination of QE2 and the big projected increase in the budget deficit caused by the compromise tax bill has helped spur another jump in commodity prices that will reduce real consumer income and negate much, if not all of the intended boost to consumer spending.

In addition economic growth will be tempered by the temporary nature of the stimulus, continuing high unemployment, a moribund housing sector, the dire condition of state and local finances, a lack of readily available credit and the ongoing fragility of a banking sector that is still loaded with toxic assets that are significantly overvalued on banks' balance sheets.

Another major headwind to growth is the ongoing need to reduce household debt to normal levels after the credit binge of recent years. Consumer credit excluding student loans continued its year-long slide in October, falling by $32.5 billion, and the unwinding has barely started. Although consumer spending has perked up recently, we note that a national survey indicated that the percentage of people saying that they used their credit cards over the Thanksgiving day weekend was the lowest (17%) in the 27-year history of the survey. According to major credit card companies, the use of personal credit cards dropped 11% in the 3rd quarter from a year earlier. Does all of this sound like a consumer ready to spend freely? We think not.

As if all of the above weren't enough, the chances of financial and economic crises overseas, particularly in Europe, China and Japan are exceedingly high. The turmoil in the European Union is not a temporary crisis that will be cured with the wave of a wand. A number of the weaker EU nations are basically insolvent, and their debts, sooner or later will have to be restructured. The New York Times and Wall Street Journal recently highlighted the exposure of German, French, British and Spanish banks to the debts of Greece, Ireland and Portugal. The IMF has warned that if the EU doesn't come up with a permanent solution the EU economy could go off a cliff. Meanwhile the austerity measures being imposed on the troubled countries will be a drag on the EU economy for some time to come. As for China and Japan, we'll leave that for future comment.

In light of these problems we believe that investors are overly optimistic. An 81% market rise in 21 months has already discounted a lot of good news----some of which will not happen. The market looks overbought and overextended, and is showing signs of an imminent top with lagging breadth, a lower number of new highs, overenthusiastic sentiment, higher-volume down days and a more frequent number of late-day selloffs. At this juncture we think that potential upside progress is limited while downside risk is high.

Message from the media has been that consumers are focused on reducing debt levels, and paying down existing balances. Do you believe in fairy Tales?

If you believe that and think positive thoughts,

your good vibes might save Tinkerbell,

because that story is a fairy tale.

By Chuck Jaffe
10/13/10
BOSTON (MarketWatch) — If the media doesn’t understand consumer delinquency numbers, there’s no reason to believe consumers get it. But what became patently obvious last week when the American Bankers Association released second-quarter data on the nation’s credit picture is that the “good credit behaviors” we keep hearing about of late are mostly hogwash.

It’s not entirely surprising. In a nation that has a deficit problem, where average consumers have at least minor debt troubles, there are going to be a lot of delusions and misconceptions about how credit works.

Consider how three news organizations covered the American Bankers Association release on Oct. 5. According to the Associated Press, “Delinquency rates for three key consumer-loan categories improved in the second quarter,” which was surprising to anyone who read the Bloomberg Business News report which said that “U.S. consumer-loan delinquencies increased for the first time in a year…amid a slowdown in recovery from the worst economic crisis since the Great Depression.”

MarketWatch, meanwhile, noted that “In a positive sign for the economy, the number of consumers who were delinquent on their loans fell in seven of 11 loan categories.”

In other words, the economic data was pointing in every direction, signifying nothing. It certainly does not mean what economists, politicians and most in the media are saying it means.

Do you believe in fairy tales?

The message from the media has been that consumers are focused on reducing debt levels, and paying down existing balances. They are using credit cards less, building their savings and being prudent with their spending. The Federal Reserve’s G-19 Consumer Credit Report showed that, as of July, revolving consumer debt had been on the decline for 23 straight months, a period of nearly two years.

If you believe that and think positive thoughts, your good vibes might save Tinkerbell, because that story is a fairy tale.

“Look at the charge-off numbers for the banks and they are almost dollar-for-dollar the decline in consumer debt,” said Greg McBride, senior financial analyst for Bankrate.com. “So you are getting headlines about how much better off consumers are, and how they are paying down their debts, but that’s not what’s really happening.”

It’s an economic sleight of hand that should feel pretty familiar. It’s akin to statistics showing that unemployment is going down, when the numbers exclude the chronically unemployed who have been out of work for so long that they drop out of the active work force. They’re not working, but the overall statistics look better with them on the outside.

That’s how it is on consumer-debt numbers too. There are two main ways for things to get better: either consumers pays down their bills or banks write off the worst garbage on their books.

A recent study by CardHub.com looking at the G-19 report and comparing it to bank charge-off numbers found that revolving debt was off by $12 billion in the second quarter of 2010, but that banks actually charged off some $21.8 billion in bad debt. What that means is that consumers actually accumulated debt—nearly $10 billion more than the year before—and the only progress was caused by banks giving up on consumers who are too far gone to pay.

CardHub’s latest projection is that consumers will accumulate an additional $26.2 billion in credit card debt this year, relative to 2009.

Lenders aren’t just writing off their bad, old debts, they’re tightening up on making new ones. As a result, the few consumers who really have taken the tough economy to heart and who have made strides on debt reduction and credit-score improvement have been met with tougher credit terms.

Tighter limits

Many credit-card issuers, for example, are “walking up the balance,” which means they are reducing a customer’s credit limit as the consumer pays off outstanding debt.

Say someone has a credit card with a $10,000 limit and holds the average household credit debt of roughly $9,000 on that card. They pay off $2,000 of that debt; their balance has shrunk to $7,000, but the card issuer—wanting to reduce its potential liabilities—might cut that borrower’s available limit down to $7,500.

In this case, the borrower is doing the right thing, but they have little to show for it. When they started this debt-reduction effort, they were using 90% of their available limit; the reduced credit limit means they finish their pay-off using 93% of the reduced balance. That puts them closer to the edge and likely means the consumer’s credit score will not improve, in spite of the fact that they have less total debt. Link to the rest of the fairy tale

Credit Card Debt at Lowest level in 8 years...What's In Your Wallet?

Eileen AJ Connelly
Associated Press

NEW YORK — The amount consumers owed on their credit cards in this year's second quarter dropped to the lowest level in more than eight years as cardholders continued to pay off balances in the uncertain economy.

The average combined debt for bank-issued credit cards – like those with a MasterCard or Visa logo – fell to $4,951 in the three months ended June 30, down more than 13 percent from $5,719 in the same period a year ago, according to TransUnion.

The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.

Credit card debt remained the highest in Alaska, but slid 7 percent there to $7,148. A total of 22 states recorded debt higher than the national average.

Residents of Alabama paid off the most debt, dropping their average balance by 27 percent to $4,753.

More borrowers also made payments on time. The rate of cardholders past due by 90 days or more fell to 0.92 percent in the second quarter, from 1.17 percent last year.

That's the first time the delinquency rate has been below 1 percent since the second quarter of 2007, before the recession, said Ezra Becker, director of consulting and strategy in TransUnion's financial services unit. The rate fluctuates during the year, he said, but the improvement is more evidence that consumers are working to make sure their credit cards remain in good standing.

That concern reflects several economic factors, from the fear of unemployment to the fact that the collapsed housing market means it's harder to cash in on home equity when money gets tight. "You can't buy groceries with your house anymore," Becker said.

Reflecting the weak economies in the states hardest hit by the housing crisis, the delinquency rate was highest in Nevada, at 1.5 percent of cardholders, followed by Florida, 1.24 percent, Arizona, 1.11 percent and California, 1.08 percent. In all, 16 states fared worse than the national average for delinquencies.

The lowest delinquency rates remained in North Dakota, at 0.54 percent, and South Dakota, at 0.55 percent.

In a twist, Becker said the foreclosure crisis could be helping to improve the timeliness of credit card payments and lower balances. When people don't make mortgage payments, he suggested, they have a short-term cash boost.

"That can provide extra money to pay down credit cards," he said.

Besides paying down debt, consumers are getting fewer new cards. Nationwide, the number of new accounts opened dropped almost 6.5 percent from last year.

TransUnion predicts that the national delinquency rate will remain below 1 percent for the rest of the year. However, on the high end, the Nevada rate is forecast to edge up to 1.6 percent.

Credit Card Interest Rates at 9 year highs...Gotta love financial reform

By RUTH SIMON
Wall Street Journal

Credit-Card Rates Climb

Levels Hit Nine-Year High as New Rules

Limiting Penalty Fees Help Fuel Rise

Interest rates continue to tumble for the U.S. Treasury, companies and home buyers alike. But for a large portion of 381 million U.S. credit-card accounts, borrowing rates have been moving only one way: up.

And average rates are likely to climb further in the near future.

New credit-card rules that took effect Sunday limit banks' ability to charge penalty fees. They come on top of rule changes earlier this year restricting issuers' ability to adjust rates on the fly. Issuers responded by pushing card rates to their highest level in nine years.

In the second quarter, the average interest rate on existing cards reached 14.7%, up from 13.1% a year earlier, according to research firm Synovate, a unit of Aegis Group PLC. That was the highest level since 2001.

Those figures look especially stark when measuring the gap between the prime rate—the benchmark against which card rates are set—and average credit-card rates. The current difference of 11.45 percentage points is the largest in at least 22 years, Synovate estimates.

By comparison, the spread between 10-year Treasurys and a standard 30-year fixed-rate mortgage is just 1.93 percentage points, near historical averages, according to mortgage-data provider HSH Associates.

The moves are driven by a combination of forces. The Credit Card Accountability Responsibility and Disclosure Act of 2009 has given card issuers less flexibility to raise interest rates as they wish. At the same time, issuers are still dealing with credit-card delinquencies that remain above historical levels.

"The rules have changed and the goalposts of risk have changed," says Paul Galant, chief executive of Citigroup Inc.'s Citi Cards unit.

Banks used to boost rates in a hurry on borrowers who fell behind on payments or otherwise turned out to be surprisingly risky. However, under the Card Act, financial institutions must warn customers at least 45 days before making substantial changes to rates or fees. People can avoid future rate increases and pay off existing balances over time.

As a result, most changes affect only new credit-card purchases. New rules that took effect Sunday limit what banks can collect in penalty fees, too.

Now bank executives say they need to be smarter when setting the initial interest rates on credit cards. In many cases, that means starting off with a higher rate. "We can't come up with penalty pricing or if we can, quite frankly, it's too late to do much good," says Stephanie Keire, head of consumer credit-card risk management at Wells Fargo and Company. Link to complete article

New debit-card deal said reached in Wall St bill (a.k.a. Main Street gets the hook yet again but Jamie Dimon is pleased)

(Reuters) - (Additional reporting by Maria Aspan; Editing by Leslie Adler)

Large banks appeared likely on Monday to face new limits on debit-card transaction fees as a key U.S. senator said he had reached a deal to include the provision in an overhaul of financial regulations.

But card networks like Visa Inc and MasterCard Inc scored a win as the new deal scales back the limits on fees they would have faced under legislation that passed the Senate last month.

Democratic Senator Dick Durbin said his compromise is likely to be accepted by a joint Senate-House of Representatives committee that is hammering out a final version of the legislation, which aims to avoid a repeat of the financial crisis of 2007-2009.

The debit-card transaction fees, also known as interchange fees, are among the disputes that negotiators from the House and Senate hope to resolve this week so they can send a final version of the regulatory overhaul to President Barack Obama to sign into law by early July.

The deal appears to ensure that the committee will quickly resolve the issue when it meets on Tuesday.

"Interchange is now basically done," wrote Concept Capital analyst Chris Krueger in a research note. "Game over."

Retailers, restaurants and other merchants have long complained that card networks and issuers charge them excessive fees to process their transactions.

The United States has some of the highest interchange rates in the world.

Banks and card issuers say the clampdown would benefit merchants at the expense of consumers, who could pay higher prices or see a reduction in banking services.

Major credit-card issuers include Bank of America Corp., JPMorgan Chase, Citigroup Inc and Capital One Financial Corp.

Banks with less than $10 billion in assets would be exempt. Credit-card fees would face no such limits.

The House bill contains no restrictions, and banks have been lobbying furiously to keep them out of the final version.

Durbin's new deal would exempt the fees that Visa and MasterCard charge banks. The Fed would be allowed to ensure that the networks don't use the exemption to pass revenue on to card issuers.

That's a "significant win" for the two card networks, which together control 80 percent of worldwide electronic transactions, said James Ellman, president of financial services hedge fund Seacliff Capital.

Visa closed up 5.0 percent ($3.86) at $80.90 and MasterCard closed up 4.2 percent ($9.08) at $223.34.  Link to full article


Grandpa: Visa closed up 5.0 percent ($3.86) at $80.90 and MasterCard closed up 4.2 percent ($9.08) at $223.34. ENOUGH SAID....credit card companies rise 5% in a day and this implies the financial reform "compromises" are good for the consumer!

When did the "big bad wolf" become a pleasant house pet for the kids?????

Marketwatch 6/21/10:
Interchange fees are small charges that merchants pay Visa and MasterCard  for the right to accept cards run on their payment networks. Those fees are then passed on to card issuers such as the big banks.

Interchange fees worth almost $50 billion were collected last year and roughly 80% of that money went to the 10 largest banks in the United States, including Bank of America Corp.  and J.P. Morgan Chase & Co. according to Durbin's office.

Is it just grandpa or is the media world off its axis?? Small fees equate to almost $50 billion and 80% go to the 10 largest BAILED OUT BANKS!!!

Financial group spent $2.66M lobbying in 1Q...$2.66 million should be enough to kick out some teeth in financial reform

WASHINGTON (AP) -- The Financial Services Roundtable, a group representing big banks, brokerage firms and insurance companies, spent $2.66 million in the first quarter to lobby on legislation to overhaul financial regulations and an array of other issues.

That's up from the $2.26 million that the group spent in the year-ago period, and the $1.8 million it spent in the fourth quarter of 2009.

The group lobbied Congress and federal agencies on financial reform and on measures affecting credit cards, mortgages and foreclosure, student loans, insurance, immigration, small business, retirement investments, data privacy, taxes, trade and disaster planning.

The legislation to rewrite the financial rulebook is now in a House-Senate conference to reconcile the two houses' differing versions. Key lawmakers have said they hope to deliver a final measure to President Barack Obama by July 4.

In addition to the House and Senate, the financial industry group also had lobbying contacts with the White House, the departments of Treasury, Commerce, Justice and Transportation, the White House Council of Economic Advisers, the Federal Deposit Insurance Corp., the Small Business Administration, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Office of the U.S. Trade Representative, the Federal Trade Commission and the Environmental Protection Agency, according to a disclosure form filed April 15 with the Senate's public records office.

Among the group's members are Allstate Corp., Aon Corp., Bank of America Corp., Citigroup Inc., MasterCard Inc. and Visa Inc.

Lobbyists are required to disclose activities that could influence members of the executive and legislative branches, under a federal law enacted in 1995.

Grandpa: $2.66 million will prove to be an adequate amount to knock out many teeth in the finanical reform bill. Once again, our elected "representatives" will simply sell our children and grandchildren down the river. THINK GRANDPA IS SIMPLY BEING CYNICAL?

SAN FRANCISCO (MarketWatch) 6/21/10:  Visa Inc. (V 81.07, +4.03, +5.23%) and Mastercard Inc. (MA 223.49, +9.23, +4.31%) shares climbed Monday afternoon as U.S. politicians reached an agreement on the regulation of interchange, or "swipe" fees on credit and debit card transactions. Assistant Senate Majority Leader Dick Durban said in a statement that an agreement was reached on his amendment regulating such fees. The new language is expected to be eventually accepted by the group of politicians that are trying to craft a final Wall Street reform bill by early July. "We were able to reach an agreement which makes minor changes to strengthen consumer protections and bring competition to a market where there is none," Durban said in a statement. Visa shares gained 5.2% to $81.08 while Mastercard rose 4.4% ($9.00+) to $223.75 in afternoon action Monday.

When credit card companies stock price launches after news pertaining to financial reform, you can safely assume the lobbying extortion money was most effective!

Capital One Financial U.S. credit card charge-offs decline to 9.48 pct in May

June 15, 2010

(Reuters) - Capital One Financial Corp's (COF) U.S. credit-card defaults fell in May in a sign that consumer stress was easing.

In a regulatory filing, Capital One said the annualized net charge-off rate -- debts the company believes it will never collect -- for U.S. credit cards fell to 9.48 percent in May from 9.68 percent in April.

Accounts at least 30 days delinquent -- an indicator of future loan losses - declined to 4.80 percent from 5.07 percent.

For U.S. auto loans, Capital One's charge-off rate was 1.87 percent in May, up from 1.75 percent in April, and the delinquency rate rose to 7.75 percent from 7.13 percent.

In credit card international operations, including Canada and Britain, the charge-off rate decreased to 8.21 percent from 8.60 percent, while the delinquency rate was lower at 6.08 percent from 6.28 percent in April.

Capital One routinely kicks off the monthly reporting of credit card charge-offs. JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Citigroup Inc (C.N), American Express Co (AXP.N) and Discover Financial Services (DFS.N) are expected to report the monthly performance of their credit card portfolios later.

Capital One is the third-largest U.S. issuer of Visa (V.N)-branded credit card and the fifth-largest issuer of MasterCard (MA.N)-branded credit cards.

Capital One shares closed at $40.46 Monday on the New York Stock Exchange. (Reporting by Supantha Mukherjee in Bangalore; Editing by Aradhana Aravindan)

Grandpa: ...decline to 9.48 pct in May...a sign that consumer stress was easing...Nearly a 9.5% charge off rate and this is deemed a sign that consumer stress was easing!!?? Their charge off rate for February 2009 was 9.33% so please HELP ME with defining "easing stress".

Maybe Capital One Financial is crafting yet another "accounting twist" as they implemented in May 2009. Their reported headline charge off number was 9.41% however "a change in bankruptcy processing" reduced their headline figure by 50 basis points:

A change in bankruptcy processing resulted in an improvement in the U.S. Card charge-off rate that is reflected in the May results. The impact was approximately 50 basis points. While our internal guidelines require bankrupt accounts to be charged off within 30 days, our practice had been to charge off customer accounts within 2 to 3 days of receiving notification of bankruptcy. Due in part to an increase in the volume of bankruptcies, we have extended our processing window to improve the efficiency and accuracy of bankruptcy-related charge-off recognition. The new process remains within Capital One’s internal guidelines, as well as FFIEC guidelines that bankrupt accounts must be charged-off within 60 days of notification.

What's in your wallet? More important question...What's in your corporate ethics policy?

Dylan Ratigan and Senator Bernie Sanders (I) Vermont and Bernie is ready to break up the monopolistic banks

Senator Bernie Sanders is truly an Independent and a man on a mission. He is prepared to present legislation to break up the monopolistic banks. The largest 4 banks in the country issue 2/3 of all credit cards handle 50% of mortgages and collectively have $7 trillion in assets (over 50% of the United States GDP).

Over 10 years, Wall Street spent $5 billion on lobbying and $300 million in just 2009. He is aware that the middle class is collapsing and Wall Street is living in a parallel universe. Bernie also notes, "the issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress."

Enjoy the 6 minutes as I am not sure Bernie took a breath...

Visit msnbc.com for breaking news, world news, and news about the economy

Capital One Financial Defaults on the rise

Capital One Financial (COF) reported a 10.87% default charge off rate for March. This is a 68 basis point increase from February and a 46 basis point increase from the 10.41% rate in January 2010.

Their at least 30 days delinquent rate was 5.3% for March down from the 5.51% rate in February.

Capital One's charge off rate for their international operations was 9.4% which reflects a 133 basis point increase from February and a 37 basis point increase over January. The delinquency rate from international operations was 6.39% for March down from 6.68% in February and 6.66% in January.

Capital One Financial closed at $46.06 4/14/10. As of this close, COF is up $7.72 (20%) year to date. On March 5, 2010, Goldman Sachs downgraded COF to a neutral from a buy. On March 4th, COF closed at $36.84.

Welcome to the new era of quant fund robot equity trading as a Goldman Sachs downgrade now equates to a 25% positive move in the stock.

Federal Reserve Proposes New Rule limiting fees

Federal Reserve Press Release (3/3/2010):
The Federal Reserve Board on Wednesday proposed a rule amending Regulation Z (Truth in Lending) to protect credit card users from unreasonable late payment and other penalty fees and to require credit card issuers to reconsider increases in interest rates.

"This proposal addresses two key costs of using a credit card--fees and interest rates," said Federal Reserve Governor Elizabeth A. Duke. "The rule would prevent credit card issuers from charging large penalty fees for small missteps by consumers and would require issuers to reevaluate rate increases imposed since the beginning of last year."

Among other things, the proposed rule would:

Prohibit credit card issuers from charging penalty fees (including late payment fees and fees for exceeding the credit limit) that exceed the dollar amount associated with the consumer's violation of the account terms. For example, card issuers would no longer be permitted to charge a $39 fee when a consumer is late making a $20 minimum payment. Instead, the fee could not exceed $20.

Ban inactivity fees, such as fees based on the consumer's failure to use the account to make new purchases.

Prevent issuers from charging multiple penalty fees based on a single late payment or other violation of the account terms.

Require credit card issuers to inform consumers of the reasons for increases in rates.

Require issuers that have increased rates since January 1, 2009 to evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate.

The proposed rule represents the third stage of the Federal Reserve's implementation of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act), which was enacted in May 2009. The provisions of the Credit Card Act addressed in this proposal will go into effect on August 22, 2010. In July 2009, the Board issued a rule implementing the provisions of the Credit Card Act that went into effect on August 20, 2009. In January 2010, the Board issued a rule to implement the provisions of the Credit Card Act that went into effect on February 22, 2010.

The notice that will be published in the Federal Register is attached. Comments on the proposal must be submitted within 30 days after publication in the Federal Register, which is expected shortly.

Likely outcome of proposed rule change: The common stock of Capital One Financial, Amercian Express and Discover Financial Services will likely move higher as the Cheeto's eating, Red Bull drinking quant robots do not read the news nor can they spell wrisk.

U.S. consumer credit rises for first time in a year NOT!!

WASHINGTON (MarketWatch) -- In an encouraging sign for the economy, U.S. consumers increased their debt in January for the first time in a year, just the latest hint that household demand may be on an upswing.

Total seasonally adjusted consumer credit, a measure of total debt taken on by individuals, increased in January $4.96 billion, or at a 2.4% annual rate, to $2.46 trillion, the Federal Reserve reported Friday.

The Fed also revised the figure for December 2009 to a $4.6 billion decrease in total consumer borrowing. The Fed had previously reported a $1.8 billion decrease in December. The media was not going to offset the "positive" with this negative revision.

For the full year, consumer debt (seasonally adjusted) dropped by 4% to $2.45 trillion from $2.56 trillion in 2008.




Seasonal adjustments according to the U.S. Census Bureau
Seasonal adjustment is the process of estimating and removing seasonal effects from a time series in order to better reveal certain non-seasonal features. Examples of seasonal effects include a July drop in automobile production as factories retool for new models and increases in heating oil production during September in anticipation of the winter heating season.

The media was giddy with the unexpected increase in consumer debt. NOTE: the increase was purely due to seasonal adjustments (a.k.a applies a factor to the actual figures to make it look more palatable under the premise it smoothes out the volatility).

The actual non-seasonally adjusted number was a decrease of $4 billion versus the “smoke and mirrors” figure of plus $4.96 billion. This simply did not matter as the media and the equity market focused on the seasonally adjusted figure that was $9 billion more than the “real world” number. The transparent Federal Reserve reports an increase of $4.96 billion when the actual figure was NEGATIVE $4 billion.

Next time you deposit your paycheck, simply apply a seasonal adjustment factor to the deposit slip and see if your bank will credit your account $1,500 on a $1,200 check.

Charlie Rose and Elizabeth Warren (21 minutes)

Elizabeth Warren:
I’ve spent my time and my research on economic death and rebirth. And much of that was about what happened to America’s middle class, how we have hollowed out America’s middle class. It will not save us if a handful of Wall Street banks prosper and the rest of America fails.


I am afraid. I’m afraid because of what I see in the real economy. I’m afraid because I don’t see books that are clean, balance sheets that have been cleaned up. I’m afraid because in October of 2008, Secretary Paulson came to the American people and he said the problem is toxic assets on the books of the banks, and they’re still there.

Here’s the deal. Right now, the Fed has the power actually to do a lot of this. The Office of the Controller of the Currency, which is the federal bank regulator, has the power to do a lot of what this agency would do. But the truth is they don’t want to do it. They’re not interested in it. It’s not what they do.

Link to Charlie Rose Elizabeth Warren interivew

Capital One Financial and American Express Increase Card Rates

BOSTON (TheStreet) -- American Express, Capital One Financial and Citigroup raised the interest rates of some popular credit cards before the Credit Card Accountability, Responsibility and Disclosure (CARD) Act took effect on Feb. 22.

The CARD Act forbids issuers from raising interest rates less than a year after an account is opened and forces them to apply payments to balances with the highest rates first. Issuers must also give 45 day's notice before changing rates.

These regulations are meant to help cardholders, but they will likely cut into issuers' revenue, prompting some to pre-emptively boost rates. While the prime rate has remained at a low of 3.25% since December 2008, the average annual percentage rate (APR) for credit cards increased almost two percentage points since May 22, when the law was signed.

According to the LowCards Complete Credit Card Index, which tracks the APRs of more than 1,000 credit cards, the average advertised APR on Feb. 22 was 13.54%, up from 11.64% on May 22. The rates on some of the nation's most popular cards have increased even more significantly since October 2008:

The APR for American Express' Blue card has almost doubled to 17.24% from 8.99%.
The rate for Citigroup's Platinum Select card starts at 11.99%, up from 7.99%.
The APR for the Capital One Platinum Prestige card starts at 11.9%, compared with 7.15%.

Some cardholders perceived as higher risk by their issuers have received rates as high as 29.99%.

While the CARD Act provides needed restrictions against "any time, any reason" rate increases, it doesn't provide "every time, every reason" protection. Issuers can still raise rates on future purchases if they provide 45 days' notice. Cardholders can also expect rate increases in the near future as the Federal Reserve eases its foot off the interest rate brake.


Welcome to Credit Card Reform. Can't wait to see the details of Financial Reform...

U.S. credit card charge-offs up, delinquencies ease a bit

Reuters
The U.S. credit card sector posted mixed performance in January as charge-offs rose sharply, while early stage delinquencies declined for a third month in a row, according to Moody's Investors Service.

The writedown of uncollected credit card debt by lenders, or charge-offs, rose sharply to 11.15 percent in January, while early stage delinquencies fell below the 6 percent mark to 5.96 percent, according to Moody's Credit Card Indices.

The delinquency rate measures the proportion of account balances for which a monthly payment is more than 30 days late as a percent of the total outstanding balance.

"The improvement in the early-stage delinquency rate was contrary to seasonal patterns that typically lean toward rising early stage delinquencies this time of year," said William Black, senior vice president at Moody's.

"This month marks the first January since 2004 where early-stage delinquencies declined from the prior December, an improvement that is an encouraging indication of stability or improvement in charge-off rates by mid-year," said Black.

Moody's base expectation is for the unemployment rate to plateau for much of the second half of the year. Under this scenario, and if delinquency rate trends continue to improve, Moody's expects the charge-off rate to peak close to 12 percent during the next several months.

Link to full article:
U.S. Credit Card Charge Offs Up

Grandpa:
Moody's base expectation is for the unemployment rate to plateau for much of the second half of the year. Moody's, isn't this the same organization that rated toxic residential mortgages as AAA as their "base expectation" was that home prices would not fall?

Moody's Investors Service

New Credit Card Law Allows Some Aggressive Lender Tactics to Continue

Wall Street Journal
A new federal credit-card law that takes effect Monday could erase billions of dollars a year in fees and interest charges paid by consumers. But card issuers are already deploying new tactics that could prove costly for even the most cautious cardholder.

The law made some important changes. Card companies must now tell customers how long it would take to pay off the balance if they only make the minimum monthly payment. Customers can only exceed their credit limit if they agree ahead of time to pay a penalty fee. And unless a cardholder misses payments for more than 60 days, interest-rate increases will affect only new purchases, not existing balances.

Banning these and other profitable tactics is expected to cost the card industry at least $12 billion a year in lost revenue, according to law firm Morrison & Foerster. This has sent the industry scrambling to find new sources of revenue. So get ready for higher annual fees, higher balance-transfer charges, and growing charges for overseas transactions.

Consider the new offer from Citigroup Inc. The bank will give cardholders a credit of 10% on their total interest charge if they pay on time. That sounds enticing, except that if you don't pay on time, your interest rate is 29%.

The biggest new tactic may be one of the oldest: raising rates. As long as credit-card companies inform you ahead of time and don't make any sudden rate changes, they are mostly free under the law to charge whatever they want. They can raise the rate on new purchases made as long as they provide 45 days notice that they are doing so.

U.S. banks on average increased the interest rate on their credit cards by about two percentage points between December 2008 and July 2009, according to Pew Charitable Trusts, a nonprofit group. Some consumers say that their accounts have been hit with sudden interest-rate increases even if they haven't been late on a payment.

New credit card law allows some aggressive lenders tactics to continue

Stagecoach ride from St. Joseph, MO to Salt Lake City $150.

The experience of meeting new friends along the route....Priceless...

Don't leave home without it and what's in your wallet?

Bill Maher interview with Elizabeth Warren

Warren, the chair of the Congressional Oversight Panel for TARP, explained that banks and their lobbyists are hammering Congress and fighting against the interests of American families by blocking financial reform. The problems are obvious and the solutions are too, but for some reason, we can't seem to get the two together, Warren said.

Lobbyists making multiple house calls in a day.

Capital One Financial to reimburse customers $775,000

Reuters:
Capital One Financial Corp will reimburse about $775,000 to customers following an agreement with U.S. bank regulators over complaints of credit card account closing practices.

The practices occurred from 2004 through 2006 and involved the company's assessment of annual membership fees, the Office of the Comptroller of the Currency said on Thursday.

Capital One charged the fees on accounts with no outstanding balance owed after consumers had asked the bank to close the accounts, the agency said.

Capital One expanded its reimbursement beyond practices flagged by the OCC to include customers who paid off accounts within 90 days after requesting that the accounts be closed.

"This problem was the result of a systems issue that we fixed in 2006," Capital One said in a statement. "At the time, we refunded membership fees for many customers who contacted us directly but, in retrospect, we should have done so for an additional 3,400 customers, as well. We sincerely regret this error."


Grandpa:
You charged fees on accounts with no outstanding balance owed after customers asked you to close their account and you use the excuse that it was a system error! COF clearly believes their client base is about as intelligent as their commercials. Children have a better sense of right and wrong than the management of COF (a.k.a Con Or Fleece).

Then you have the audacity to sincerely regret this error!

Enjoy Your TARP Funded Dinner

Capital One Financial (COF) sets record net charge offs and receives an analyst upgrade

Welcome to Wall Street.

Earlier today, Capital One Financial reported that there net charge off rate on credit cards reached 10.41% (up from 10.14% in December). In an effort to conduct damage control, an analyst rode in on the white horse to save the day.

Analysts at CLSA Securities upgraded Capital One to outperform from underperform, saying recent price drops have made the company's shares attractive.

"We are making a near-term trading call, that the stock could bounce back to what we believe will be a 12-month high $30s to low $40s trading range, if total credit losses peak in the first quarter of 2010, as we forecast," the CLSA analysts told clients Tuesday.

At 10:45 am, COF stock price is up roughly 4%.

Isn’t it comforting knowing that there is no manipulation in the equity market! I remain confident that CLSA Securities’ large clients will be out of their positions well above the close from this past Friday.

Hi Yo Analyst (we got away...)

Capital One Financial credit card default rates continue to rise

Capital One Financial Corp's (COF) U.S. credit-card defaults rose in January, in a sign that consumers continue to remain under stress, it said in a regulatory filing.

Capital One said the annualized net charge-off rate -- debts the company believes it will never collect -- for U.S. credit cards rose to 10.41 percent in January from 10.14 percent in December.

Accounts at least 30 days delinquent (an indicator of future loan losses) were 5.80 percent from 5.78 percent.

For U.S. auto loans, Capital One's charge-off rate was 4.27 percent in January, down from 5.68 percent in December, and the delinquency rate fell to 9.61 percent from 10.03 percent.

In credit card international operations, including Canada and Britain, the charge-off rate fell to 9.03 percent from 9.58 percent, while the delinquency rate rose to 6.66 percent from 6.55 percent.

In October 2009, their monthly charge of rate was 9.04%. From October 2009 to January 2010, their net charge off rate has risen 1.37 percentage points or 15.2%.

What’s in your wallet?