ANALYSIS
Soaring defaults could fell normally resilient industry
Time Nov 14, 08 3:10 PM CST
(Newser)
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Credit cards may be the next industry to be pummeled by the financial crisis, Time reports. The charge-off rate—money that lenders don't think they'll collect—is set to hit 10% in 2009. That's double the rate of the last decade and amounts to $96 billion in unpaid debt. Typically credit card firms do well in downturns because late fees and higher rates raise revenue. But that equation breaks down if customers start defaulting en masse.
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Wave of defaults in developing world could imperil global economy
New York Times Oct 24, 08 6:11 AM CDT
(Newser)
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While the financial crisis is leading the West into recession, other parts of the world from Hungary to Argentina face an even worse fate: default, market panic, and possibly social upheaval. Now the IMF is working to build a giant line of credit, funded by rich nations, to provide emergency capital to nations on the brink. "The tsunami has only just reached their shores," said one international banker.
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Untapped market prompts banks to aggressively market plastic
Los Angeles Times Oct 22, 08 1:36 PM CDT
(Newser)
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Banks are moving to tap China’s lucrative market for credit cards, issuing millions in new plastic in recent years, the Los Angeles Times reports. There are about 100 million credit cards today in China, up from 3 million in 2003. And the market is still tiny, by American standards: The average Chinese consumer has only two cards, while an American has five.
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Budapest secures huge loan to prevent default à la Iceland
New York Times Oct 17, 08 8:33 AM CDT
(Newser)
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The Hungarian government secured a $6.7-billion loan yesterday from the European Central Bank in an attempt to stave off an Icelandic-style national meltdown. The EU newcomer's troubles derive from loans denominated in euros or Swiss francs, rather than the softer Hungarian forint. Frozen credit markets have left Hungary's government and citizens struggling to repay their debts.
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Nordic nation pegs exchange rates, nationalizes another bank
AFP Oct 7, 08 7:51 AM CDT
(Newser)
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Iceland is in talks to receive a $5.43 billion loan from Russia to stave off economic collapse, as the tiny Nordic country nationalized yet another bank and fixed its currency's to the euro. An oversized banking system has left Iceland dangerously exposed to market gyrations, and the prime minister yesterday warned that the country was on the verge of default.
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ANALYSIS
Credit default business dooms, saves giant
Time Sep 17, 08 7:40 AM CDT
(Newser)
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The Federal Reserve seemed to draw a hard line against bailouts with Lehman Bros., but just days later it stepped over that line to save AIG. Why? First, says Time : Size. Its implosion would have been "as close to an extinction-level event" as we've been since the Depression. But also: Fear. Whereas Lehman’s collapse was long expected, AIG blindsided the Fed and market participants alike. The business is so complex and mysterious, and its reach so broad, that no one was sure what its failure would mean.
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Beer heiress never got San Diego property bills, aides say
Newsweek Jun 29, 08 11:07 AM CDT
(Newser)
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A trust company overseen by Cindy McCain has paid almost $7,000 in overdue property taxes to San Diego County, after Newsweek began looking into unpaid bills on the condo. Government notices sent to a Phoenix address were returned by the post office; and the county claims that McCain owes a further $1,742 that will go into default July 1.
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ANALYSIS
US charged against home value now gone
USA Today Jun 18, 08 3:55 PM CDT
(Newser)
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As home values boomed, banks raised credit limits and extended offers for new cards, urging consumers to pay off the debt by drawing on their equity, USA Today reports. Many of those borrowers now face high interest rates on homes tapped of equity and hemorrhaging value—and the boom in foreclosures has been accompanied by a 6-year high in credit-card delinquencies.
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Last-minute deal keeps King of Pop's ranch from public auction
Associated Press Mar 13, 08 5:32 PM CDT
(Newser)
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The King of Pop will live another day as the rancher of Neverland. Michael Jackson made a last-minute deal today to refinance his notorious California homestead and will retain ownership, the AP reports. The 2,500-acre property had been scheduled for a public auction next week after Jackson—who hasn't lived there since being acquitted of child molestation charges in 2005—defaulted on his $24.5 million loan.
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Lenders reclaim 45K properties as mortgage payments rise
Bloomberg Feb 26, 08 2:00 PM CST
(Newser)
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Banks seized more than 45,000 homes in January, nearly double the number from a year ago and up 8% from December, Bloomberg reports. Rising adjustable-rate mortgage payments were the culprit. Total foreclosure filings, which include default and auction notices in addition to seizures, increased 57% to 233,001, the sixth consecutive month with more than 200,000 filings.
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Treasury secretary suggests aid for prime-rate borrowers
Wall Street Journal Jan 7, 08 9:17 PM CST
(Newser)
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Treasury Secretary Henry Paulson advised the mortgage industry today to give help to millions of financially stressed homeowners whose mortgages are set to rise. His comments signal that the Bush administration is starting to push lenders to expand relief beyond subprime borrowers to homeowners with other adjustable-rate loans, reports the Wall Street Journal .
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Amount overdue on
US accounts surged
26% in October
Associated Press Dec 23, 07 10:35 PM CST
(Newser)
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It’s already looking like an iffy New Year for many credit-card holders: the number of Americans falling behind on their payments spiked sharply this year and analysts don’t expect 2008 to be much brighter. The value of credit card accounts at least 30 days late surged 26% in October to $17.3 million, the AP found. Defaults—when lenders give up and write off the debt—jumped 18% to almost $961million.
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Tells investors to expect losses in fourth quarter
Financial Times (UK) Dec 12, 07 11:14 AM CST
(Newser)
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Predicting even tougher times for the US housing market, Freddie Mac chief Richard Syron yesterday told investors in New York that the government-sponsored mortgage lender would report another net loss in the fourth quarter and credit losses to $12 billion on its mortgage portfolio, reports the Financial Times. Freddie Mac reported a record $2 billion loss in the third quarter.
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President Cristina to replace husband
Reuters Oct 29, 07 4:07 AM CDT
(Newser)
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Argentine first lady Cristina Fernandez de Kirchner has become the country's first elected female leader after trouncing 13 rivals in the presidential election yesterday, Reuters reports. A glamorous 54-year-old lawyer and center-left senator, she will take over from husband President Nestor Kirchner in December. Kirchner is credited with leading Argentina's recovery from an economic meltdown in 2001.
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King of Pop defaults
on $23M loan and has 90 days to pay—or else
Fox News Oct 26, 07 2:10 PM CDT
(Newser)
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Michael Jackson has defaulted on a $23 million loan against his storied Neverland Ranch, and he’ll lose the Santa Barbara fortress if he doesn’t pay in 90 days. The King of Pop is in his worst financial situation ever, says Fox News, and speculation is mounting that he’ll declare bankruptcy to limit