just.a.guy

Credit Card Delinquency Wave Reaching Tidal Force

Another story to watch for as this unfolds will be a wave of fraud tied to credit cards (involving both lenders and borrowers).

The FBI last year received 65,000 cases of mortgage fraud, and was staffed with only 150 agents to deal with them. This is per an interview with William K. Black (here: www.ritholtz.com/blog/.../). And those cases are only against the 20% of mortgage originators above the waterline who were regulated. That was on the borrower side. On the lender side we had Countrywide et al.

We have seen the same thing in hedge funds with the collapse of Madoff, Stanford, and a few others.

Every credit bubble reveals massive fraud when it deflates, in a very predictable pattern (see: Kindleberger's classic book on the subject).

I doubt credit cards will be any different. Place your bets!