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Is This What Recovery Looks Like?

09/18/09 Baltimore, Maryland

The demise of the credit card crisis has been greatly exaggerated… here’s one for those recovery cheerleaders:

Bank of America and Citigroup — which comprise 35% of the entire credit card industry — announced this week that customers are defaulting on their credit cards at the highest rates since the recession began. Bank of America’s charge-off rate registered a whopping 14.5% in August. In other words, for every $7 in credit card debt on BoA’s books, they expect to lose $1.

Other mega-banks and creditors like JP Morgan, Discover, Amex and Capital One revealed similar August numbers. It’s an extra-harsh dose of reality for the Street, which enjoyed improving credit default rates this summer, especially in July. We’re a bit less surprised… nearly every measure of loan losses at U.S. banks are still soaring into record territory:

US Loan Defaults

This is a component of our thesis at Agora Financial — that while the credit fallout has been cruel, it has yet to equal the size and scope of the credit bubble that preceded it. We still have quite a mess ahead of us.

Author Image for Ian Mathias

Ian Mathias

Ian Mathias is managing editor of The 5 Min. Forecast.  We discovered Ian working as a full time rock climbing guide and writing on the side. As it turns out, markets and global economics can be extreme too… at least enough to keep him around. Since working for Agora Financial, respected media outlets including Forbes.com, the Associated Press, Yahoo, and MSN Money have syndicated his writing. He received his BA from Loyola College in Maryland and is currently studying writing at the graduate level.

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One Response

  1. tony bonn said

    if we look around hard enough i am sure we will find a green shoot buried in this data somewhere….

    the secret to success might be looking real hard for a real long time but it’s there….really it is…

    on September 18, 2009.

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