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Politics : Welcome to Slider's Dugout

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To: Nor Skrem who wrote (6897)	11/5/2007 11:49:15 AM
From: jim_p	Read Replies (4) of 50277

We had the same reckless lending with credit cards as we had with sub-prime lending and for the same reasons, the issuers didn't take the risk. The risk was packaged up and sold to John Q Public under the system that evolved from the S&L crisis from the 80's. We had teaser rates with mortgages that escalated to rates the buyers could not afford and we also had zero interest rate advances on your credit card.........just cash the enclosed check and spend it on anything you want. Problem is their rates escalated up to 34% if you didn't pay. My guess is we will have the same problems with credit card CDO's as we are having with mortgage backed CDO's. Amazing how we had over a trillion dollars of mortgage backed commercial paper roll off with no buyers recently. Next the fed comes in with a $100 billion SIV rescue plan and then it lower the capital requirement for the fund to 1/10 of that required by the banks. Let’s see now......$100 billion X 10 = $1 trillion. Now another trillion or so in credit card CDO's that will not be able to get financed??? So...........who do you think are the biggest holders of this toxic paper?? How safe is your money market fund?? Jim

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