CHESSNOID

Many people think there will be a credit card bailout that will help them out.  Unfortunately, like all the bailouts we have seen are set up not to help the American people but the greedy companies.  These companies are insolvent and should be allowed to fail.  Wasting more tax money on them is useless.  They will use the money to just pay out their CEOs and counterparties.

The credit card companies are now experiencing extreme losses on their portfolios which will eventually lead them to post greater losses. The losses they are experiencing right now are 20 year record highs.

U.S. credit card defaults rise to 20 year-high

NEW YORK (Reuters) – U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co (AXP.N) and Citigroup (C.N) amid a deepening recession.

AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate — debts companies believe they will never be able to collect — rose to 8.70 percent in February from 8.30 percent in January.

The credit card company’s shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast.

In addition, Citigroup Inc (C.N) — one of the largest issuers of MasterCard cards — disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.

“There is a continued deterioration. Trends in credit cards will get worse before they start getting better,” said Walter Todd, a portfolio manager at Greenwood Capital Associates.

MORE PAIN AHEAD

Analysts estimate credit card chargeoffs could climb to between 9 and 10 percent this year from 6 to 7 percent at the end of 2008. In that scenario, such losses could total $70 billion to $75 billion in 2009.

“People underestimated the severity of the downturn we are experiencing and I wouldn’t be surprised to see them north of 10 percent,” said Todd, who added American Express was most exposed to higher credit card losses, given its sole reliance on the industry.

Credit card lenders are trying to protect themselves by tightening credit limits, rising standards, and closing accounts. They have also been slashing rewards, raising interest rates and increasing fees to cushion further losses.

Meredith Whitney, one of Wall Street’s best known and most bearish bank analysts, estimates that Americans’ credit card lines will be cut by $2.7 trillion, or 50 percent, by the end of 2010 — and fewer Americans will be offered new cards.

“We believe that the US credit card industry will feel additional credit pain over the next 12-18 months. Until lenders like Capital One show stabilization, followed by trend-bucking improvement over a several-month period, we will continue to remain bearish on credit card lenders,” said John Williams, an analyst at Macquarie Research.

When these companies lobby the Obama administration and Congress to bail out the American people, they will simply be asking for bailout money to pay for the losses on their credit card portfolio write offs but will disguise it as helping the American people again. All these credit card companies do not deserve a penny of the taxpayer’s money. Some of the companies like American Express and Citicorp have already dipped their corrupt hands in the fraudulent bailouts.  The best thing to do is just say No to bailouts!