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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (59983)	1/19/2001 7:19:34 PM
From: patron_anejo_por_favor	Read Replies (4) \| Respond to of 436258

Nice riffs from Doug Noland tonight, skewering the credit card lenders (most of whom issued their quarterly reports in the past week): prudentbear.com Subprime credit card issued Providian increased loans by $3 billion during the fourth quarter, an annualized growth rate of 50%. “For the full year 2000, total managed credit card loans increased 42% over year-end 1999.” There were 1.3 million new accounts during the fourth quarter and for the year new accounts increased by 31% to 16.3 million. Importantly, however, there is now clear trouble on the horizon with charge-offs jumping to a rate of 8.48% compared to 7.61% during the third quarter and 6.78% during the year ago fourth quarter. All the same, the company continues to give guidance for 35% loan growth for 2001. Providian ended the year with total assets of $18.1 billion (up 26% for 2000) supported by shareholder’s equity of $2 billion. The bulls continue to trumpet the rates customers are willing to pay on Providian cards. We continue to suspect that Providian books a lot of revenues that it will never collect. To fund a ballooning balance sheet of risky subprime credit card loans, Providian has raised $13 billion of deposits. From the company’s website: “Providian offers safe, FDIC-insured deposit accounts that consistently pay among the top rates available nationally. Open your account online and get started saving today…Providian CDs are a worry-free way to earn excellent returns and diversify your portfolio.” And for you big spenders, “Providian has two banks; your total deposits are insured up to $100,000 per accountholder, per bank.” FDIC insurance hard at work… And then there’s Capital One. The company reported that it added 4.3 million net new accounts during the quarter – yes, the quarter. Adding on average more than 47,000 new accounts daily, CapOne ended the year with 33.8 million accounts. “Managed consumer loan balances” increased $5.4 billion during the quarter to $29.5 billion, about double estimates. This 22% increase for the quarter translates to an 88% annualized rate, yes, 88%. From a Wall Street research report: “COF noted that portfolio growth in the quarter was enjoyed in all three segments (superprime, prime and subprime), with a bias towards superprime on the strength of the company’s recently launched 0% purchase teaser program. Management also stated the prime segment increased “significantly” for the first time in the last few years. Also of note, management indicated that the recently formed alliance with K-Mart has already generated in excess of 1 million new accounts since mid-September.” I don’t make this stuff up… "FDIC insurance hard at work"? Indeed, HO HO HO!