Mr. Orenbuch: Yes. It's changed in every category of lending. The credit card has had record levels of losses. There is record weak growth and spending volumes are declining. And there are prospective changes on the pricing side over the course of the coming nine to 12 months.
TWST: Does this mean that longer term, industry growth as well as margins are
going to be slower?
Mr. Orenbuch: I think it certainly means margins will be lower, and I think for
the next several years, it probably means that industry growth will be slower
and likely negative. The legislative changes will make it such that some
accounts aren't nearly as profitable, and therefore those customers won't be
targeted. In a piece we wrote several weeks ago, we said that we thought that
you could probably end up with a 5% smaller business in credit cards just
because of less teaser rate marketing and perhaps as much as another 10%
reduction from the lower end of the business where it's much tougher to price
those customers effectively.
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