Monday, December 01, 2008

Speaking of credit...

Credit card industry may cut $2 trillion of lines
Oppenheimer analyst says
Mon Dec 1, 3:02 am ET

(Reuters) – The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent."

Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.

A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.

Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.

"...We are now beginning to see evidence of broad-based declines in overall consumer liquidity."

"In a country that offers hundreds of cereal and soda pop choices, the banking industry has become one that offers very few choices," Whitney wrote in a note dated November 30.

She also said credit lines to consumers through home equity and credit cards had been cut back from the second-quarter levels.

"Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said.

(Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott)

In other news, Yahoo is having their news tabulated in Bangalore - guess it's time to cut Yahoo loose, too.

And, for good measure:

The Seattle Times
JPMorgan cutting 3,400 Seattle jobs
JPMorgan Chase is laying off 3,400 Washington Mutual employees in Seattle — more than 80 percent of the 4,300 people it employs in the city.
By Melissa Allison

...JPMorgan Chase is laying off 3,400 Washington Mutual employees in Seattle, according to spokesman Tom Kelly. That's more than 80 percent of the 4,300 people it employs in the city.

Most branch workers will keep their jobs, however.

WaMu's former headquarters city is taking the brunt of the 9,200 WaMu layoffs that JPMorgan is making nationwide. It employs about 43,200 people altogether...

Makes you wonder who's going to be doing all that work now that people in Seattle aren't going to be doing it.

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