M-P

Tough Times for Card Companies - Barron's

If I recollect from another SA piece, BAC and JPM had over 20% of their revenue come from the CC business, which is definitely material. The revenue streams of many of the banks is in jeopardy in the near to medium term. CC fees are almost pure margin and the charge-offs have been manageable ... I don't see job growth increasing at a fast rate even with a job works program, which will take some time to spool up. Also, the wage delta between the jobs lost and new jobs is likely to be significant - add-in the a higher savings rate and deleveraging and consumer spending should be down by $500B to $1T, if not more. All said, without strong jobs and wage growth, I see the CC issue only becoming worse and bank earnings under serious pressure.

Banking's Ins and Outs: $188 Billion from Bailout, $1.6 Billion to Execs

I believe in capitalism and the implied pay for performance contract, but I have trouble with the bank execs receiving this kind of $ when they are being subsidized by the taxpayer because they took undue risk. Why don't we look at a clawback provision whereby we take back $ that was ill-gotten via reckless leverage and risk. Unfortunately, the seeds of failure were planted a number of years ago and we are now cleaning up the mess. Why do we reward malfeasance? Why do we subsidize recklessness? Why do we pay for incompetence?