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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Ramsey Su who wrote (29245)	3/24/2005 2:57:57 PM
From: russwinter	Read Replies (5) of 110194

More "after the horse is out of the barn" credit tightening (manana) on the way for credit cards: JPMorgan sees higher credit card charge-offs Thu Mar 24, 2005 12:41 PM ET NEW YORK, March 24 (Reuters) - JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) said on Thursday that under new federal rule interpretations it will increase minimum payments due on some of its credit cards which in turn could hike payment defaults and charge-offs. The new Office of the Comptroller of the Currency guidance, which applies to all the banks it regulates, comes on the heels of increasing concern that current, low credit card minimum payments increase credit risk at banks and mask risky customers, the No. 2 U.S. bank said in a regulatory filing. In fact, credit card lenders should require minimum payments that amortize outstanding account balances over a reasonable period of time, said the Federal Financial Institutions Examination Council. That means the amount of time customers have to pay off bills will likely be shortened, thereby increasing the minimum payment allowed. JPMorgan Chase & Co. Chief Operating Officer Jamie Dimon has alluded to the upcoming changes in recent investor conferences. The FFIEC is an interagency group that reviews uniform principles, standards, and report forms for federal agencies that oversee banks and other financial institutions. But rising minimum payments will be "likely to result in an increase in delinquencies and charge-offs in the accounts," the bank said in its filing. How much remains uncertain. JPMorgan Chase said it expects to increase minimum payment requirements in stages beginning in the third quarter of 2005 with full implementation expected by the end of the first quarter of 2006.

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