Banking, finance, and taxes
Credit Card Losses, Next Big Trouble For Banks
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Word is starting to get around town that Citigroup (C) has some more trouble coming and it could show up as soon as the next quarter. In this case, Citi’s problems may not be isolated to the big bank.
Layoffs, falling housing prices, and lack of access to credit are driving credit car defaults through the roof. There was some evidence of how serious this is becoming in the America Express (AXP) results for the third quarter.
According to MarketWatch, "Citigroup said that it lost $1.4 billion in the third quarter from credit card securitizations and that it expects such losses will continue, possibly reaching record levels in 2009.
In an SEC filing, Citi said it had added $3.9 billion to credit reserves.
Citi trades at $13.65 against a 52-week low of $11.54. Expect that the stock has not seen its bottom yet.
Douglas A. McIntyre
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