Thursday, November 17, 2005


Student Loans And Credit Cards 'Asset Backed'?

The Financial Times has an update on the credit bubble. "Issuance of asset-backed securities in the US is set to top $1,000bn for the first time this year, according to figures that show ABS issuance is up 23 per cent this year compared with 2004."

"Deals based on home equity loans still dominated the market, up slightly from 2004 and accounting for 40 per cent of the total volume at $329.3bn. But this was down from a 47 per cent share last year as other sectors grew faster."

"Student loan issuance rose 21 per cent to $45.7bn. Sallie Mae, the former government-sponsored entity now turned private, was responsible for 42 per cent of issuance."

"Credit card issuance was worth $41.8bn by the end of September compared with $37.8bn in 2004. This is expected to have slowed in the fourth quarter, however, after changes to bankruptcy rules last month sparked a rush to file for protection ahead of the change."

I guess they consider the notes students sign as the asset behind that but what's behind credit cards? At any rate, a $trillion is a lot of paper for a debt-soaked US consumer.
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