Of course you know I think credit cards are going to produce a tsunami of writedowns, right? Things are looking more and more like that tsunami is right around the corner:
Credit card writedowns soared to record levels in February, representing an all-time high in the 20-year history of the Moody’s Credit Card Index, as [...]

Recently, I posted a Wall Street Journal article that suggested smaller banks and new banking enterprise can supply the lion’s share of additional credit needed for the U.S. banking system. While President Obama is off meeting the heads of the big banks, we should keep in mind that there are other institutions out there [...]

This comes via Angus Robertson at Research Recap. Just as the RMBS post yesterday confirmed, moe writedowns are coming in other credit classes:
In a trend likely to accelerate in 2009, the default rate on bank loans to speculative-grade corporations rose sharply in 2008 and recovery rates on leveraged loans dropped over the same period, [...]

With the shadow banking system of hedge funds and non-bank financial institutions in shambles and the banking system’s credit shrinking, U.S. government officials are desperate to get credit into the system any way they can. A key part of that is the TALF, which is a back-door recapitalization of the shadow banking system, albeit not yet with the necessary regulatory oversight to prevent future excess leverage.

One often overlooked piece to this puzzle is fresh capital injecting into brand new lending institutions. The Wall Street Journal has a good article today demonstrating banks are still opening. (Hat tip Judith) And depositors are rushing in.

Below is an interview with an expert on the issue of mortgage cramdowns. Basically, this issue is all about debt forgiveness for borrowers and writedowns for lenders. Lenders do not like cramdowns for that reason. See below for a view on cramdowns from Paul Van Valkenburg of the Mortgage Industry Advisory Corp.

Warning: you should expect him to have a negative bias given who he works for. I actually like cramdowns. Van Valkenburg is looking at this from an investor’s perspective and wants senior creditors not to be negatively impacted by the coming cramdown legislation. Nevertheless, I am posting this video because it is informative as to the impacts on mortgage-backed securities, mortgage servicing and housing.

The following article comes from Absolute Return Partners’ Niels Jensen. Absolute Return Partners LLP is a London based private partnership which provides independent asset management and investment advisory services globally to institutional as well as private investors, charities, foundations and trusts. Visit www.arpllp.com to learn more about them.

This news comes via Reuters:
Bank of America Corp is carrying loans on its balance sheet marked at more than $44 billion above their fair value, the company said in its annual report filed with U.S. regulators on Friday.
The bank said it ended 2008 with $886.2 billion in loans, but estimated the fair value — or [...]

From the Financial Post:
American Express Co., the largest U.S. credit-card company by purchases, is paying some cardholders US$300 each to close accounts so the lender can reduce the risk of defaults as the recession deepens.
People who got the offer to “simplify” their finances must pay off their entire credit-card balance by April 30, according to [...]

This comes from the Danish daily Berlingske Tidene. It suggests that Citibank is cutting back all international lending. Citigroup has sold its German operations to a French bank and I understand they are cutting credit lines in the UK as well. In seeing all these stories together, one gets a full view of [...]

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