Reuters News reporting today that credit card defaults at Metris jumped to over 15% in May. Well above expectations. The stock was down $1.85 today. This is beginning to look like a replay of Providian.
I see they just sold a bunch of CC backed securities. Does that explain all the BT offers I'm getting from them? Maybe I should ask for an increase, and promise to transfer more, hehe.
breeze, Securitizing cc receivables and selling them to institutional investors is done everyday by all cc companies. You should see the blocks of paper that Cap1 and MBNA offer. The reason I posted this is sort of a warning that carrying a balance with Metris { Direct Merchants Bank} may well be dangerous. They have already entered into a consent decree with the OCC to slow the rate of growth in their cc operation. Just like Providian. Also, some rumors keep reappearing about the condition of their Master Trust-that's what the entity they use to package and resell cc paer is called. If the ability to service the debt falls to a particular point, the holding company must kick in money to bring it back to the levels specified in the prospectus. Bottom line is, thepossibility of some 29.99% rates a la Providian. I just wouldn't run a large balance with these guys.
Nah, no large balances - I don't do that anyway - I don't want to get in that kind of position with any of them - none of them can be trusted, hehe.
keepmine, you're right; they seem to be entering the Providian phase. They've had to increase their reserves in the last few quarters and revise guidance after lowering the time limit to recognize bad debts. Their situation is bad all around: The FCC forced Metris to reduce credit lines due to illiquidity; and their charge off rates are skyrocketing because a high percentage of their cardholders with large CLs have a high UR.
