The crunch behind the credit crunch

While securities backed by subprime mortgages have caused losses and layoffs from Wall Street banks to Main Street mortgage lenders, securities backed by other types of consumer loans, such as credit card receivables, haven’t been impacted by the credit crunch, yet. All of that could soon change according to a report today in the corporate finance industry trade publication Financial Week, if the broader economy weakens further and housing prices continue to fall, the credit card sector could go south as soon as the beginning of 2008! According to the report, at Sept. 30, there was over $920 billion in consumer credit card debt and with delinquencies still low compared with historical standards, but rising steadily over the past year, the scales may tip post Christmas.