I got this in the mail the other day (click image for larger view).
Out of the blue and with no warning, Providian / WAMU decided to close my unused $21,700 credit card. My FICO score is over 700. True, I didn’t need and wasn’t using that credit card because I have other ones that are better. And true I carry a high balance on one of my other credit cards (because I get paid a 3% spread to do it).
But wow, talk about someone desperate to cut exposure exposure. We can assume the same thing is happening at all other credit card companies, starting with the lowest FICO scores and working their way up. It’s panic in the board rooms, at the ratings agencies, with the Wall Street analysts. It’s also panic at the Fed, in the White House and on Capitol Hill.
Bernanke can cut rates all he wants, but like I said before (most recently here), when the credit markets seize up and lenders don’t want to lend, it doesn’t matter how low rates are, borrowing will contract. It’s like pushing on a string. Cheers.