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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: sun-tzu who wrote (131431)10/26/2001 7:51:44 PM
From: patron_anejo_por_favor  Read Replies (1) of 436258
 
Nice comments from Doug Noland in todays Credit Bubble Bulletin on COF's ridiculous prediction of 20% profit growth in 2002:

prudentbear.com

From a Wall Street research report commenting on Capital One’s optimistic business projections for the foreseeable future: "In the scenario where the 90% rise in loss scenario, in which 3Q02 losses increase to 7.5%, the company would receive even more benefit from higher delinquency related fees, cut marketing $350 million, and institute and/or raise some late and over limit fees from $29 to $35 dollars on selected accounts. The company suggested that in the worse case scenario -- which we estimate would correspond to a loss rate of over 12% -- it could cut marketing as much as $500 million, raise late and over limit fees, and reprice accounts to generate $1 billion in earnings. The company has less than 4% losses at present. From these scenario analyses, one can see why they are so optimistic about 20% earnings growth." Sure, and Providian’s customers looked very "profitable" as well… It is no problem to bill for late charges and other fees, while booking accounting "profits." It’s just not so easy – and getting much more difficult by the week - to collect them. Such practices can lead to nasty charge-offs and funding difficulties down the road…

Amen, brother Noland!
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