Subprime lending — what could go wrong? Banks, it seems, think the answer is “not much,” and have started pitching credit cards to subprime borrowers.
From the New York Times story:
But as financial institutions recover from the losses on loans made to troubled borrowers, some of the largest lenders to the less than creditworthy, including Capital One and GM Financial, are trying to woo them back, while HSBC and JPMorgan Chase are among those tiptoeing again into subprime lending.
Credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3 percent from the same month a year earlier, according to Equifax’s credit trends report released in March.
I love this part:
The lenders argue that they have learned their lesson and are distinguishing between chronic deadbeats and what some in the industry call “fallen angels,” those who had good payment histories before falling behind as the economy foundered.
Pick your applicable quote:
“Insanity is doing the same thing over and over again but expecting different results.” –Rita Mae Brown
“Those who cannot remember the past are condemned to repeat it.” –George Santayana
“Say what?” –Anonymous