patrick.net

huh? You’re saying that 4 out of every ten people haven’t had a job in 27 months? Bullshit.

Right - it is bullshit, but not in the way you mean.

This according to the rather excellent Automatic Earth blog:

"More startling, the problem is markedly worse in this recession than even in the deep slide of 1981 and 1982. During that painful recession, the overall unemployment rates were just as bad as now, but the problem of the long-term unemployed was far less acute. At the peak of the unemployment scourge in 1981 and 1982, the share of jobless Americans classified as long-term was 26%, compared to the 40% today. (The numbers would actually be worse if they included those who have simply dropped out of the work force in frustration.)"

Austinhousingbubble says

Long term unemployment refers to workers unemployed for 27 months or more. If you think these numbers smell bad, let’s see your research.

TechGromit explained what you meant. Your statement was a bit misleading--it should have read 40% of the UNEMPLOYED Americans have been unemployed for 27 months or more.

I think that sounds a little high, but could be right. The job losses were pretty high at the beginning of the recession. I'm not a big fan of the Automatic Earth blog though...

pkennedy,

Interestingly I only had 2 cards currently and used them equally, neither was my primary card as far as usage goes. My wife also has a card that is used a little more than mine. We are now a two card house hold, unfortunately they are both with the same bank which I see a slight risk to my family’s credit card needs. If this other bank starts acting like it is going to fail as Chase has been then we will have to shop for a new set of cards or better yet just go cradles.

The only reason I asked what they could raise my rate to is that I wanted to know what they would put someone through if they really had a need to get a better limit. Basically this was not just about Chase trying to lower its risk (note the assoicated risk was due to their financials, not mine) , they also wanted to force some people like me to basically accept new credit card terms more flavorful to Chase. I would guess it is some attempt to get around the Credit Card Act of 2009.

Vicente,

I know about the old terms of my card, but I thought we where told the Credit Card Act of 2009 parts of which went into effect Feb 22, 2010 was supposed to force banks to give greater advance notice of changes in credit card terms and the right to opt out of significant changes in terms. In my case there were significant changes made to the terms before I was notified and no opt out provision was provided. I could just ask to apply for a new card with new terms or take the new terms on the existing card period. Clearly I misunderstood this part of the new law or the banks found a loophole. I am sure that several of the politicians that are briefed on this site when something interesting happens are just as confused as I am about the letter given the new rules.

BTW, Chase has people reading this thread.

When new rules are in effect, some will follow, some will resist, and some will exploit. Expecting every single company to follow the new rule because "the rule is the rule" is bit too naive. Sometimes, some companies will decide not to follow new rules, because that's better business decision for them when the profit they can get by not following the provisions is expected to be greater than the peanalty they may be faced with in the future.

Austinhousingbubble says

huh? You’re saying that 4 out of every ten people haven’t had a job in 27 months? Bullshit.

Right - it is bullshit, but not in the way you mean.
This according to the rather excellent Automatic Earth blog:
“More startling, the problem is markedly worse in this recession than even in the deep slide of 1981 and 1982. During that painful recession, the overall unemployment rates were just as bad as now, but the problem of the long-term unemployed was far less acute. At the peak of the unemployment scourge in 1981 and 1982, the share of jobless Americans classified as long-term was 26%, compared to the 40% today. (The numbers would actually be worse if they included those who have simply dropped out of the work force in frustration.)”

On another thread you said: (Regarding strategic defaulters)
just because you can doesn’t mean you should….just because you can, doesn’t mean you should…just because you can doesn’t mean you should…repeat…

--------

So what do you suggest the 40% long term jobless (your number) should do to pay their mortgage?

@thunderlips

Do you have any securities credentials? Certified accountant? Executive at a high level in any financial institution?

What facts do you actually have of BOA paying back the government, other than conspiracy theories, and rants?

Banks make a lot of money. Money and law go together, and banks are very good at understanding both.

@tarkin
I'm guessing they have a multitude of rules they're following. Dropping someones credit limit to $500 is for all intense purposes closing the account. I think we all agree on that.

They probably have a way to reduce credit with the new law, and it's one of their only tactics left. Aren't there credit limits on some cards and credit lines on others? Perhaps the law only limits some aspects. Credit line might not be considered a term either. Just repayment methods?

There are far too many unemployed lawyers right now just waiting to jump on a class action suit. They have to be careful in these situations, and I'm sure they've got it all covered.

ust because you can doesn’t mean you should….just because you can, doesn’t mean you should…just because you can doesn’t mean you should…repeat…
——–
So what do you suggest the 40% long term jobless (your number) should do to pay their mortgage?

First of all, it's a number retrieved from the BLS, not my asshole. Use the Googles if you're so dubious.

As for the autosuggestion -- let's have a little context: I was referring to the original poster's notion of taking on too much mortgage with the explicit intention of trying to qualify for a principal forgiveness later on. Just because you can do something disgusting, doesn't mean you should, and just because everyone else is doing it doesn't make it right.

But as for your question, if a mortgage holder finds themselves part of the long-term unemployed then they should take the matter up with their lender. Maybe try to arrange some kind of deferred payment plan, or maybe offer to play caretaker to some of the shadow inventory on the lender's books. There should be no taxpayer subsidies for either the banks or the borrowers. If it doesn't make you sick, I suggest you check your pulse.

"But as for your question, if a mortgage holder finds themselves part of the long-term unemployed then they should take the matter up with their lender. Maybe try to arrange some kind of deferred payment plan, or maybe offer to play caretaker to some of the shadow inventory on the lender’s books. There should be no taxpayer subsidies for either the banks or the borrowers. If it doesn’t make you sick, I suggest you check your pulse."

How many unemploy know they will become long term unemployed until they are?
You do know that if you get a loan mod or refinance, it would be a restructure of your mortgage and you will turn your loan into recourse if it was originally nonrecourse in CA. Mark my words the next stage of this will be going after the defaulters with wage garnishments. What happens in 2012? not the end of the world but the end of IRS taxforgiveness.

Another funny thing...I am leaving for a business trip and a couple days vacation afterwards. I wonder if they knew that? I mean they all but canceled my card right as I was walking out the door. How did Chase know...were they upset that I booked the hotel with my other card? (Though I was not even sure about that, had to call the hotel before I canceled the Chase card.) The new $500 limit would not have coverd the hotel stay any way. The more I think about this...how did they know just when to attempted to screw with me the most. I gues the last laugh is on them. My credit score will rebound and I will no longer be a Chase customer.

See you all later, enjoy the thread...

Austinhousingbubble says

First of all, it’s a number retrieved from the BLS, not my asshole. Use the Googles if you’re so dubious.

Patrick, this too must be added to the vault and to the T-shirt.

Where's HARM when we need him?

I agree with Thunderlips; I think it's a ploy to artificially decrease people's credit scores and then, in the future, raise thair APRs and prevent them from taking on new debt.

I've long since given up trying to understand how CC companies arrive at the credit limits that they offer customers. When I first moved out of the US, I was thinking about getting a Mastercard or Visa with a small credit line so that I could buy stuff when back home, and, having never had more than about $5k in income in the US, I was expecting be going around hat-in-hand and being rejected repeatedly.

Turns out that my bank, looking only at the $11k I'd stashed there in savings over the past few years, offered me that much as a credit line! Eleven thousand dollars was an insane amount of money to be entrusting a 25-year-old with, but they did it.

So I used that CC from time to time when back in the US, and still have it.

I also have a credit card with Sumitomo Bank, in Japan, where I work. Most of my savings have been going right into my account with them, and never coming out. My credit line on this card is Y100,000, or about $1k US.

I also use this card sparingly, so the low limit never bothered me. Until I wanted to buy an airline ticket to the US which, thanks to the 2008 oil surcharges, cost Y109,000. I called up the bank and asked if I could have an increase in my credit line. They said they'd look into it, and that they'd get back to me.

They did get back to me, the next day, and the answer was no.

I was gob-smacked. My savings balance with them was Y12,000,000 -- two orders of magnitude larger than my credit line, and, in fact, more than the government FDIC-equivalent would insure. (So I was showing a lot more faith in the bank than the bank was willing to show in me.) My balance had increased from month to month without fail for seven or eight years. But no trust.

So I had to go to the ATM, withdraw Y109,000, and bring it to the travel agent.

After that I bought my home, and now no longer have anywhere near that much savings, so I'll probably be at this low limit forever.

Credit card companies' logic just doesn't make any sense at all.

Trying to understand CC companies? How about this. I got a letter from AmEx last year telling me that my card is cancelled. But a couple week later I got an AmEx application in the mail.

I wonder if the CC companies got their business model from Uranus, lol.

Here is my funny story from my 1st and 2nd mortgage company.
Since someone said banks are monitoring these boards.
I am going call my bank TBTF just in case they are reading.

So TBTF is sending me legal notices and even realty chicks to tell me to pay my mortgage or else. American Express had the sense to cancelled my premier card without notice.
But TBTF just this week sent me a notice to lower my $20K CC limit to $4.9K!
Are they nuts, their left hand is trying to collect from my mortgage while the right hand is leaving $4.9K available on my CC.
If I am really a ruthless defaulter I would have gone shopping and stimulate the economy some more.
BTTF is too big to function.

"Most US consumers are using DEBIT cards these days"
(I don't have a link handy)

I think this is a 'good thing'.

Think about how credit-card companies make money
1) interest rates and fees : this used to be their cash cow, now this is being curtailed by the new laws
2) they charge 2-4% of your purchase amount - the merchant pays it. Now CC companies are encouraging consumers to use the card for 'every little thing' , because this is becoming their main revenue stream.

Using a DEBIT card denies them both these.

The only down side is using a debit card doesn't contribute to your credit history - if you care about that.

Merchant fees on credit cards are around 1.6% these days. Not 2-4% anymore.

Debit cards are around 30 cents per transaction.

I assume credit card companies are trying to lure people into using a credit card for every little to try and create brand loyalty, and a solid habit of billing everything via credit cards. If you bill every little thing on your "main" credit card, you're more likely to put everything, including large purchases on credit cards. They'll make money from people who don't fully pay off their bill monthly. I'm pretty sure that one of the main reasons HUGE lines of credit were given out in the past, was to try and create prestige and loyalty. People want to show off their shiny credit card with $25,000 limit. They offered other incentives like $150 cash back if you used it to autopay a bill every month for 6 months. They're trying to get their credit card to the top of the stack in your wallet.

Not understanding how a bank deems a credit line, doesn't make the banks crazy, it means they have a method you don't fully understand. They make a lot of money from credit cards, they're doing something correct.

I'm sure most people don't realize how abusive credit cards are in other countries. We're bitching about 18% a year. I saw a promotional letter sent to my wifes parents house in Brazil. They had qualified for the best rates available. Only 5% a MONTH. Many countries around the world have 6-9% a MONTH.

This is blowing me away. My wife opened a checking account with them and they gave her $7000 limit credit card without even applying. I had to dispute with the credit bureau to take the card and inquiry from the credit report.

Chase cancelled a card last year (or was it 2008?) that I had not been using.

Not sure why they bothered, now they keep sending me new applications and beg me to join them again.

Meh.

One word about "debit" cards. If you are using a Visa/MC branded check card, call your bank and tell them you want only a PIN enabled ATM card. I could go on, but just suffice it to say that you don't want to be squaring up with your bank AFTER your check card has been stolen and money has been removed from your account. This guy sums it up pretty well: Here's the first surprise: "Debit or credit?" is actually an unfair, misleading question. There is no such thing as a debit card that's used as a credit card. When you hand over a debit card, you are engaging in a debit transaction no matter how you answer. When clerks ask this question, they are really asking you to pick one of two ways they can process your debit – a PIN (personal identification number) based transaction or as a signature-based transaction. One costs the merchant a little more and one takes a little longer to hit your checking account, but fundamentally a debit transaction is a debit transaction.
\rant off
What's in your wallet?

justme says

Chase cancelled a card last year (or was it 2008?) that I had not been using.
Not sure why they bothered, now they keep sending me new applications and beg me to join them again.
Meh.

The same here. :)

Join the club. Chase cut my CL in half a few months ago, from $9300, to $4700. Granted, I haven't used the card at all for nearly 3 years, but had continued to pay the annual fee every year. Never late, no Bks ever, 800+ FICO, zero balances on all my TLs execpt one. They said the reason was "not enough tradelines reporting paid as agreed" - probably due to my propensity (of the last several years)
of not buying "stuff", buying only what I need, and then paying cash/debit, instead of using credit, and IF using credit, PIF if at all possible, instead of carrying a balance.

To make a long story short, I thought it over for a week, and decided this, my oldest TL, had outlived it's usefulness, and was no longer worth taking up space in my wallet. I closed the account. Feck`em.

My checking acct is with Chase, and I have direct deposit of my paycheck there. They inherited me via their acquisition of WAMU(Gawd, I MISS WAMU - high 4-figure out-of-State *personal* checks cleared *instantly*, now that it's Chase, even a *miniscule*(like $50!) check from GEICO is held up for days)

I also have another CC from Chase, which, despite perfect payment history going on 4 years, never
increased in CL. Additionally, Chase 'transaction accounts" (read: checking accounts) are no longer FDIC insured. And to add yet another 'insult", the most recent batch of CL access checks they sent me, allowed me to write a check for only HALF of my puny CL. I'm seriously thinking of ditching Chase alltogether,and taking my business elsewhere.

EBGuy says

What’s in your wallet?

I used to have all kind of cards, except the one from the company keep saying "what's in your wallet?" on TV. :)

Oh,and I COULD be wrong about this, but I believe Chase(I'll apologize to Chase if not true),now reserves the right to hold up payments for up to 7 days - in other words,in theory, if you make an online payment to your creditor from your Chase checking account on, say, a Monday, for a payment that is due Friday, there is a chance your payment might be late. Again, I COULD be wrong/misinformed
about this, but(If true) it's yet another reason (IMHO) to start looking elsewhere for your banking needs.

PS: I see a Credit Union in my future.

Seaside, right now, the "What's in your wallet"-folks are my favorite enablers ;-)

I never use a debit card OR the visa/debit card feature. A rewards card is the best route to go. Pay it off in full and collect a reward every once in awhile.

#1 reason.
You can phone up a credit card and dispute a charge, any charge, for any stupid reason, and you'll get your money back. The credit card doesn't want to piss you off, it's not skin off their backs, they just do a charge back, visa does a charge back, the other merchant does a charge back, instead of getting some small % of the transaction, they ding the merchant for $20+ (unless it's a 1K+ transaction, they're probably going to do better with the charge back).

Debit cards don't have this same protection, and the money has already come out of your account! Credit cards are unsecured, vs your bank which is tied to real money.

I'm still thinking that many of these credit cards, by killing peoples lines, will often get people to a) either start using their cards again, in fear of losing them (assuming they call and beg to get it re-instated) b) close them up (like most here do), when they weren't really being used anyways. win/win in most cases.

If you're holding a credit card for emergencies, that is probably the *worst* risk a bank can take. If you're in dire needs and starting to max out rarely used cards, chances are you're heading towards a dangerous situation. They want people who will use the card regularly, and make payments regularly, that way they make a steady steam of income from them. If you do go bankrupt, at least they'll have had a good run with you. Unlike the other cards, where you just kept spending and spending until bankruptcy.

"......if our failed economy was not too big to fail then there is no bank that will ever be too big. These ivory towers have to fall before we can rebuild on solid ground." And yet he supported Obamacare. Illogical.

Back to Patrick's original title of this string. Home buyers could not care less what banks or the condition they are in where they are getting their loans from and are too naive to even think about whether they have faith in banks. All they care about are interest rates.

I never had a CC line of credit reduction. I get 2% cash back on all purchases. Debit cards are dangerous.......money comes out of your account when finders find your missing card and use it.

We have a wicked banking system. It is based on multiple indebtedness which is a generator of money supply leading to inflation. Failed small banks get bailed out by the FDIC backed by the gov't with money they don't have. Central banks are backed by the Fed with unlimited power to create money and but their toxic (worthless) assets.

wcalleallegre says

Failed small banks get bailed out by the FDIC backed by the gov’t with money they don’t have.

FDIC is not federal money --it is insurance paid by the banks.

From the good folks at CNN.
JPMorgan Chase said the percentage of its credit card holders who were 30 days behind on a payment was 1.47%, down from 1.75% in the fourth quarter. The company scaled back on the number of reserves for future loan losses in its credit card division by $1 billion, suggesting that troubles within that business could soon start to moderate. Standard & Poor's analyst Matt Albrecht wrote in a note to clients Wednesday that the bank should be able to further reduce provisions for loan losses because of the improved credit trends. Still, JPMorgan's consumer banking and credit card business both ended the quarter in the red, with its persistently troubled card division delivering a loss of $303 million. But when pressed about his outlook for the credit card business, Dimon said that it could very well turn profitable by year end.
No credit card FOR YOU!
Any suggestions on how to play this one? I've had my generous trailing stops (10%) in for a while and am hanging on for the ride. Perhaps I need to tighten them up. Nice to do something right every once in a while...

says

The FDIC ran a deficit last year of $20B. There is an implicit guarantee of Government Support of the FDIC, although they did require banks to prepay 2010 through 2012. Fortunately they found buyers for all the failed banks last year.

That's not unusual--they will run large surpluses during good times and run deficits during bad times.

Not that I want to bring up an aging thread, but yesterday my wife gets a call from Chase that they have important information about my account. She told them correctly that I do not have an account with Chase. The only response was to have me call the number on the back of my credit card. So this morning I just checked online and there is no evidence that they canceled my account as requested. If anyone thought I was overly pissed and taking this too personally before…if I ask you to cancel my card you better do it.

Do not trust this bank…

Also, a distant relative recently past away and someone opened a Chase credit card in their name while they were in critical care in a hospital about two days before they died. Maybe it is not Chase’s fault, but I warned the person dealing with Chase to continue to call them and make sure they canceled the account seems I should have listened to my own advice.

Chase, please explain why my card has not been closed as requested? You have had over a week. Should I call your fraud line and state that Chase has hijacked/stollen my account and will not close it as requested?

BTW, I cut the card up and the last letter you sent, see above, had no contact info. How amd I supposed to contact you?

OK, the Chase web site says my account is open and the phone number I found online gives me a recorded voice saying it is currently closed. Chase needs to get their systems in sync, they had over a week to update the web site with some kind of info the account is closed.

I have closed accounts with banks in the past where the user id and passwords would still work long after, but they always told me that the account was closed or eventually that there was no account associated with the login id.

So, if my account is really close why are contacting me with important new info about my account? There should be no new info or changes for a closed account?