800 Credit Score and denied a credit card...
Message 25628924
To: LondonGuy who wrote (17276) 5/7/2009 3:45:12 PM
From: SliderOnTheBlack 4 Recommendations Read Replies (1) of 17310
800 Credit Score and denied a credit card...
Interesting first hand story from a reader of Mish's
blog who was turned down by Capitol One for a new
credit card, even though he has an 800 credit score.
But, the 800 credit score isn't the story... because
Capitol One didn't even pull a credit report.
They actually sent him a denial letter telling him that
due to the "economic downturn" in his geographical area
[Tampa, Florida], they didn't even pull a credit report
and turned him down, simply because of where he lived!
That used to be called "red lining."
That story really hits home for me, because years ago
I lived in Tampa, and for like five years running it
was listed in USA Today's Top 10 Cities for economic
opportunity and quality of life.
But that was then, and this is now...
globaleconomicanalysis.blogspot.com
I've been pounding the table with both fists since day one
of the bankster bailout - that the FDIC and banking
regulators were in the banks and telling the banks - the
exact opposite of what Paulson & Bernanke were telling
Congress and the American public.
They stood there and blatantly lied to our faces, about
TARP taxpayer money being used to lend and stimulate the
economy.
And now, people have discovered the money trail where billions
were delivered into AIG's front door, only to see it being
snuck out the back door, and handed to Goldman Sachs.
Even after Meredith Whitney dropped a reality bomb on the
market a month, or so back when she said banks were in the
process of literally "cutting off" 50% of all outstanding
and available consumer credit in America - people refused
to believe it.
Believe it.
I had a V.P. of a mega-Regional Bank tell me right after
TARP was approved... that they received "orders" to start
cutting off credit. Which they did, and are still doing.
For those who are still drinking the Kool-Aid, maybe this
will help...
Here's the The April 2009 Senior Loan Officer Opinion
Survey on Bank Lending Practices from the Fed.
Consumer credit is tight, and getting tighter:
federalreserve.gov
"Somewhat larger net percentages of domestic banks than in the
January survey reported having tightened credit standards on
residential mortgages."
Perhaps more important than tight consumer credit,
is collapsing demand...
"Respondents indicated that demand for loans from both
businesses and households continued to weaken for nearly
all types of loans over the survey period."
re: C&I Loans...
"Large majorities of both domestic and foreign banks reported
a less favorable or more uncertain economic outlook, a
worsening of industry-specific problems, and a reduced
tolerance for risk as important reasons for tightening credit
standards and terms on C&I loans.
A substantial majority of foreign respondents also indicated
that an increase in defaults by borrowers in public debt
markets, decreased liquidity in the secondary market for
business loans, and deterioration in their banks' expected
capital position were important reasons for the change in C&I
lending policies over the survey period."
All foreign respondents and 37 of the 38 domestic banks that
saw weaker demand for C&I loans over the previous three months
indicated that a decrease in their customers' needs to finance
investment in plant or equipment was an important reason for
the change in loan demand.
Substantial majorities of the domestic institutions that had
experienced such weaker demand also pointed to decreases in
their customers' needs to finance inventories, accounts
receivable, and mergers and acquisitions.
----------------
And regarding the effect of a low rate environment for mortgages:
"Almost A Quarter Of US Homeowners Are Underwater"
bloomberg.com
May 6 (Bloomberg) -- A growing number of U.S. homeowners owe
more than their properties are worth after prices extended
their two-year decline in the first quarter, Zillow.com said.
About 21.8 percent of all owners were underwater as of March
31, the Seattle-based real estate data service said in a
report today...
-----------------
That's 22% of the market that can't refinance even if they
wanted to.
Add to that, the number who don't have "negative" equity, but
who don't have adequate equity to refinance (80% LTV), or
to draw any cash out to reduce debt, or to fund spending.
Add to that, the number of homeowners who have lost a job,
who have equity, but can no longer get a loan.
Add to that, the number of homeowners who have missed some
payments and negatively affected their credit, who no longer
can get a loan.
Add to that, the tighter standards on bank lending.
I've had people in the mortgage industry tell me that today,
they can finance less than 30-40% of the market that they
were able to... just a year ago.
With consumer credit getting shut off, with the the mortgage
refinance market perhaps 60-70% less than just a year
ago, and with consumers having no savings nest egg to fall
back on... ie:
seattletimes.nwsource.com
“A MetLife study released last week found that 50 percent of
Americans said they have only a one-month cushion — roughly
two paychecks — or less before they would be unable to fully
meet their financial obligations if they were to lose their
jobs. More disturbing is that 28 percent said they could not
make ends meet for longer than two weeks without their jobs.”
50 percent said they have only a one-month cushion or less
before they would be unable to fully meet their financial obligations.
28 percent said they could not make ends meet for longer
than two weeks.
29 percent of people earning $100,000+/year said they’d
struggle to pay bills after a month.
86 percent have cut back spending.
---------------
Tell me where consumer spending (2/3rds of GDP) is going to come from?
Dana Telsey just dropped a Meredith Whitney style
"reality bomb" on the market this morning while on CNBC,
concerning retail spending...
cnbc.com
"At both the high end and the low end, we are basically
seeing the consumer only buying "necessities."
What don't people understand about that?
Cars aren't selling.
Appliances aren't selling.
Clothes aren't selling.
People are only buying "necessities."
They have no savings.
Their 401K's just got cut in half.
The value of their house has collapsed by 25-50%.
Their friends, family, and neighbors are losing their jobs
at rates unseen in nearly 30 years.
And 60-70% of them can no longer use their home as their
ATM/savings account... which is what drove consumer
spending for the last 8 years.
And we have more bank bailouts, the GM & Chrysler bankruptcies,
and the coming collapse of Commercial Real Estate still to come.
And then there's always Fannie & Freddie.
...tick, tock.
Fwiw, in case no one noticed...
This rally started about the same time all the Tea Party,
and End the Fed demonstrations broke out.
And the fingerprints of GS, MS and the PPT are all over
this tape, and have been for two months, and it's gotten
so sloppy in after hours that it's laughable.
The biggest boost to this market came when GS, MS, JPM,
quit naked shorting... and started carrying the PPT's water.
They may be able to keep this market levitated a while longer,
and they may even be able to gun it higher. I don't deny
that possibility. Just quit pointing to cow patties and
telling me they're greenshoots.
SOTB
PS: DOW -120 and counting.
PPS: Late Edit...
Maria Bartiromo on CNBC just reports:
Consumer credit fell $11+ Billion last month,
over 5%... the largest drop in 19 years...
And it ain't done dropping...
You can bank on it. |
