J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

A record percentage of credit cards are delinquent, 10% according to published reports. This is absolutely stunning, as credit card delinquencies historically have run 3%, maybe 4%. Most people don't know that credit card debt is "securitized," or rolled into bond-like financial instruments and sold on Wall Street.

This could turn into another mess like recently happened with mortgages; securitization of mortgage debt recently almost wrecked the worldwide economy. I understand from published reports that the banks are having to "rush to the rescue" of some of these credit card trusts.

By securitzing their credit card debt, banks keep much of the risk of the stupendous amount of credit card debt in this country "off the books" and technically not a risk that they have to keep reserves to cover, I suppose. That way, it doesn't hurt their profitability. In my opinion, it's just greed. The world worked a lot better before debt was a commodity, and became this country's biggest export. It was better when credit was more difficult to get, and people had to qualify for it. Perhaps we'll get back to that model soon; it may just take another financial catastrophe or two before we collectively wise up.

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