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Why Credit Card Losses Are Poised to Rise

By Kevin Wack

The unusually strong loan performance in the credit card business lasted longer than many observers expected. But today the industry's prolonged post-crisis era finally appears to be over.


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Latest News

Here's a Rare Sight: A $333M TruPs Securitization

– The trust preferred securities used as collateral were originally issued by banks and insurance companies between 2002 and 2007 and the vast majority were originally held in nine bank and insurance TruPS CDOs that have since been redeemed.

Same Market Street Shopping Mall, Different CMBS

– DBJPM 2016-C3 is backed by 32 commercial mortgages secured by 54 properties; the largest loan, at $84 million, is secured by the Westfield San Francisco, a nine-story, 1.4 million square foot retail and office property located along Market Street in the Union Square neighborhood.

Wells Fargo Joins Amazon to Offer Student Loan Discounts

– The $1.8 trillion-asset Wells Fargo announced Thursday it would offer a 0.50% interest rate discount on any of its private student loan products to student subscribers of Amazon.com's Prime service.

American Credit Acceptance Preps $230M Subprime Auto ABS

– Kroll Bond Rating Agency expects losses on the collateral backing AMCAR 2016-3 to be slightly higher than that of the sponsor's previous transaction; credit enhancement on the senior notes has been increased accordingly.

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Featured Articles

Republican Platform Softens Stance on Winding Down Fannie, Freddie

– The platform that party officials approved at this week's Republican National Convention in Cleveland states that, "The utility of both agencies should be reconsidered." That contrasts with the 2012 version of the platform, which stated, "Both Fannie Mae and Freddie Mac should be wound down in size and scope."

Strategy to Woo New CLO Investors Starts to Pay Off

– Since 2013, CLO Managers have been issuing notes with rates that are initially low, but step up after 18 to 24 months, betting that they can refinance them more cheaply; so far their success has been mixed.

Private Student Loans Get an A for Credit, C for Growth

– Banks that stuck with student lending after the financial crisis are finding the business far less risky than it used to be.

'Dead People Don't Pay': Tech Takes On Marketplace Lending Fraud

– Recently allegations of fraud against Lending Club and several Chinese marketplace lenders have some observers calling for more daylight on the loans sold on these marketplaces. Specifically, they're floating the idea of a technology and service that would register and track ownership of the loans and validate basic facts about them and the borrowers.

Verizon Selling Bonds Backed by Cell Phone Payments

– The $1.17 billion deal follows a year’s worth of management deliberations over issuing asset-backeds, which Verizon expects to lower the cost of financing device payment-plan agreements.The deal will also ease pressure on the carrier's own corporate credit ratings.

SCOTUS Leaves Lenders in Lurch by Passing on Case

– The Supreme Court's decision Monday not to hear a closely watched lending case leaves unresolved some key questions for the U.S. financial industry.

Ginnie Mae Tops Freddie Mac as MBS Issuer

– The total outstanding balance of Ginnie Mae mortgage-backed securities was $1.624 trillion on May 31, compared with $1.623 trillion in outstanding Freddie Mac MBS, according to Urban Institute calculations based on eMBS agency MBS security data.

Duke’s Utility Fee Securitization Sets Important Precedent

– The $1.3 billion transaction was marketed as a corporate bond, and the strategy appears to have paid off. It was priced last week at interest rates in line with those of some the highest rated U.S. companies and government agencies.

Why Some CLO Managers Are Leaving Deals on Autopilot

– Collateralized loan obligations with static portfolios have less overhead than actively managed deals, making them more economical to run when market conditions are challanging. These deals also amortize much more quickly than CLOs with actively managed portfolio, which appeals to certain investors.

Higher California Smoking Age Latest Blow to Tobacco Bonds

– Raising the legal age for tobacco purchases by three years, to 21, is expected to lower California's tobacco tax income by about $68 million a year, according to legislative analyses. It could also have broader implications for other states.

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States Joining Ranks of Student Loan Cherry Pickers

State student loan authorities sense a business opportunity helping graduates who are gainfully employed lower their payments. Their low-cost funding could put them in competition with banks and marketplace lenders.

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