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

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To: ild who wrote (74882)	12/5/2006 11:31:53 PM
From: CalculatedRisk	Read Replies (1) of 110194

"The sky may be falling" HSBC warning ominous for U.S. lenders news.yahoo.com Experts have warned all year that a slowing U.S. economy and rising borrowing costs would lead to an increase in bad loans by homeowners and other borrowers. Grim comments from Britain's HSBC Holdings Plc (HSBA.L) about fourth-quarter trends suggest the experts may have been right. "We think the sky may be falling," said Mark Fitzgibbon, director of research at Sandler O'Neill & Partners LP. "Credit quality has been deteriorating for two quarters and we think the pace of deterioration will accelerate this quarter." HSBC, the world's third largest bank by market value after Citigroup Inc. (NYSE:C - news) and Bank of America Corp. (NYSE:BAC - news), on Tuesday said U.S. lending results may worsen from the third quarter, when higher loan losses crimped overall revenue growth. "We've seen more data coming into the fourth quarter and there is a weakening," Finance Director Douglas Flint said. In 2003, HSBC paid about $14.8 billion for Household International Inc., which lent to many people with below- average credit histories. It has since evolved into HSBC Finance Corp. The bank's North American operations, which include HSBC Finance, last year generated 31 percent of total profit, but 65 percent of bad loans. Most major U.S. lenders will report fourth-quarter results in January. Many have cautioned that loan losses will increase as economic growth moderates and bankruptcy filings rise to more normal levels. Some may set aside more reserves for losses. <MORE>

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