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Think Rising Rates Are Good For Banks? Think Again!
Forward Guidance
The Rise of Bank Credit Cards
I am seeing a small glimmer of hope in the credit card business where Wells Fargo, JP Morgan, their lines of credit to consumers have been going up on a year over year basis. What that shows you is that consumers are spending money and they also no longer have cash from not paying their mortgage or not paying their rent that they could use to reduce debt. So it's good for banks. The credit cards are probably the single best asset class for commercial banks when it comes to making money. I remember in 2009 when Capital One hit 11% gross defaults on their credit card book. That's almost a consumer finance business as opposed to a traditional banking business.
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