Riddle me this: if the title of this piece is true, why did I get notices from both JP Morgan Chase and Bank of America today informing me that they had dramatically increased my credit limits? I guess I should mention that I am not wealthy, by any stretch of the imagination. If they can afford to offer me thousands of dollars more of unsecured loans, unsolicited, why can’t they help these poor, legit, mythical businesses that “might not make payroll” this week?
I call bullshit!Patrick T. Lafferty
Raconteur; Proprietor, FortunaFaveat.com
There is ample liquidity in the market. The problem is that all of these fine, upstanding businessmen and businesswomen know how corrupt they are themselves and therefore aren’t willing to risk lending money to anyone else because “they” could be even more corrupt. It’s almost like a lack of transparency and regulation results in an inefficient market?
#1 by Shelly Walston on September 30, 2008 - 11:17 am
What about all of those Ditech (or whichever lender it is) commercials with the transparent cubicles? I mean, isn’t that how it really is? Isn’t everything transparent? Seriously? It isn’t? I’m baffled.
#2 by Patrick T. Lafferty on September 30, 2008 - 1:56 pm
And you have the Wall St. parrots over at CNBC telling you that you won’t even have credit cards to save you this time. I certainly have one piece of evidence to counteract that. Anyone else getting credit cards offers or credit line increases, via email, yesterday or today? It can’t be just me. I swear, I have no money!
#3 by Perhaps a sample of one was too small... on September 30, 2008 - 2:22 pm
Personal experience and national trend are not one in the same.
NEW YORK (CNNMoney.com)
After a weekend getaway in New York City, Joseph Lanza logged onto his Bank of America Visa account and was shocked to see that his line of available credit had been reduced to $1,000 from $3,800. Because of the recent charges from his trip, his balance was $970, dangerously close to his credit limit. “I had been trying to pay my debt down to improve my FICO score and also my debt-to-credit ratio,” said Lanza, 26, who works at an investment firm in New Hampshire.
In the midst of a financial crisis, banks have less money to lend. On top of that, the percentage of people who are delinquent on their credit card payments rose 12% in the second quarter from the same period a year ago, according to credit reporting agency TransUnion LLC. So to mitigate rising risk and compensate for less credit overall, issuers are scaling back consumer credit lines – sometimes by more than 50%, according to the American Bankers Association (ABA), a bank industry trade group. In fact, 62% of credit card issuers have cut back the lines of credit they make available to consumers, according to a recent report by Javelin Strategy & Research, which advises the financial services industry. That means that consumers across the board are suddenly finding out the hard way that their limit is not what issued to be. Consumers with better credit histories and high credit scores are less likely to get hit with a sudden restriction on their credit limits, but it can happen to anyone, according to Carol Kaplan, a spokeswoman from the ABA. “Credit lending standards are tightening across the board, it doesn’t matter how great your credit score is,” Kaplan said. “This is happening everywhere, to everyone.”
#4 by Patrick T. Lafferty on September 30, 2008 - 2:53 pm
I totally agree that a sample of one is far too small and I admit that I do have a good credit score. I’m just curious if the shills at CNNMoney and CNBC are trying to cause a conflagration over the likes of poor Joseph Lanza. He, too, is a sample of one.
I don’t know if we will ever get real numbers on this, but if any of you out there want to increase the sample size, let me know!
#5 by Perhaps a sample of one was too small... on September 30, 2008 - 3:03 pm
How about the second paragraph citing the ABA and Javelin research? Are those not real numbers or are those industry trade groups shills for Joseph Lanza, owner of a $1,000 credit limit and obviously a powerful man, too?
#6 by Patrick T. Lafferty on September 30, 2008 - 3:06 pm
“Javelin Strategy & Research, which advises the financial services industry.” This is the story they want out there. I can’t say it isn’t true, but I can’t confirm it either. Plus, they don’t up the sample size at all. I’m looking for individuals, like me and Lanza, that can independently confirm an up or down tick in their limits/rates/whatever.
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