Yep, the Credit Bubble Bulletin was extra-tasty tonight. My favorite part concerned the sub-prime lending "boom":
Considering the extraordinary environment, perhaps GMAC should be can
be forgiven for boasting of its aggressive expansion into high-risk lending.
After all, it has become the hottest ticket in town. Wall Street could simply
not be more enamored with the consumer lending business and,
importantly, the more risky the better. Telecom schmelecom, SUBPRIME
is where it’s at!. Just take a look at the stocks. Year-to-date, Capital One
has gained 45%, Providian 39%, Metris 66%, Household 52%, and
Americredit 56%. With Wall Street cheerleading all the way, the rate at
which some of these aggressive finance companies are lending is
astounding. Capital One is expected to grow managed receivables by
28%, Providian 34%, and American Express 34%. Revenue is expected
to grow 35% at Metris. Household International is also a favorite with its
core managed loans expected to expand by 22% this quarter, led by an
anticipated 40% growth rate for home equity lending and 55% for auto
loans. One Wall Street industry research report stated that “customer and
receivables growth remains robust, ranging from 20-40% annualized for
the companies we cover.”
Needless to say, he didn't consider the growth in subprime lending to be the most prudent use of capital at this stage of the cycle!!<G> |
