The latest bank regulatory filings released by the Federal Deposit Insurance Corp. showed consumer credit as the sector moving significantly against the industry trend of low asset credit cost, according to a statistical study published by A.M. Best Co.
Consumer charge-offs accelerated during the fourth quarter of 2005 for some of the largest banks with high consumer credit exposures due to the new bankruptcy law that went into effect as of Oct. 17, 2005. In the week before the deadline for filings under the old law (which permitted all debts to be wiped out by an individual after a Chapter 7 bankruptcy filing), as many as 480,000 reported cases were filed. It is estimated that as many as 2 million filings may have been recorded for 2005, a 50% increase from typical levels.
Credit card charge-offs spiked by 22.7% from the level of the fourth quarter in 2004 for the industry in aggregate, based on FDIC data. Other loans to individuals registered close to a 13% increase in charge-offs as compared with the same quarter in 2004. The largest banks reported substantially higher charge-off figures. (For a list of the five largest card-issuing bank holding companies click here www.ambest.com/banks.)
View this content by subscribing
Please register to unlock this content
I already have an account. Log in
