Is Greed Good?

Greed is Good Speech (Click Here)

In the classic movie Wall Street, Gordon Gecko (Michael Douglas) delivered a speech to the shareholders of Teldar Paper...and explained why the company should be broken up. "Greed is Good...Greed is Right...Greed works...it cuts through and captures... He went on to say that Greed will save the U.S.A."

In a conversation with my father last weekend, I explained that human nature is the downfall of the economic markets as of late. At the end of the day, we can count on people in positions of authority to lie, cheat, and steal from others. For LEH, BAC, BSC, NCC, and COF, it is an easy call. These companies have people who are greedy. One could argue that is has gone far beyond greed to being an outright pig. SIV, sub-prime, and shady accounting practices have placed everyone of these organizations in the hot seat. Lord knows what types of creative business practices are being used a these organizations. Several were willing to work with unscrupulous lenders, or saw the easy money of sub-prime. More importantly, the greed factor is such a powerful force that it has driven company officials to take high caliber risks, squander investor monies, and yes even lie to the public. Now we are seeing the well-deserved punishment of these companies.

BSC was the first shoe to drop in the latest round of the Wall Street financial meltdown, now it looks as though LEH, who this morning announced a 2.8 billion dollar loss...is reassuring investors by raising another 6 billion dollars in cash by selling assets and preferred company stock. Lehman CEO Richard Fuld Jr. further insulted the intelligence of investors by adding that the company is "well positioned" Not to be fooled Moody's cut its ratings to negative while Fitch marked teh debt rating to negative. (1)

LEH will continue to help other financials hemorrhage as it appears that the Battle of Little Big Horn is taking place. Thanks guys!

Another interesting story to follow is the fact that many of the companies listed in the SP 500 are cutting dividends. These cuts should be viewed in two ways: 1. Companies are now finding a new way to stay afloat during difficult financial times (at the shareholder's) expense. 2. Earnings and cash flow do not match the dividend, therefore it is being cut. Scary enough, 34 companies paid out more in dividends than they made in free cash flow. It is an unsustainable mark that cannot go on. This surely does not serve as good news to anyone who is holding a broad index of the SP 500...or a couple of the bog losers like GM, MOT, or NYT. (2)

WMT to the Rescue?
This is one member of the SP 500 that just has its act together. I have disclosed my long position in this stock. They are well positioned to take full advantage to the meltdown in the U.S. economy for the next few years! Back in March, WMT took the broad step to cut its margins once again...utilizing the amazing amount of leverage it has...and increasing sales volume. Target is still trying to get the number of the Wal Mart truck that ran them over. (3)

Coke lost its Fizz...
Since I liquidated my position in KO, I have made a list of reasons as to why the stock should actually be shorted at this venue. From higher operating prices such as corn syrup, to delivery truck , to general health concerns... The cola companies in the United States have to re-evaluate their positions...but there is always China. I'll include my list as to why I have turned so negative to this industry.

Sources Cited
1. http://money.cnn.com/2008/06/09/news/companies/lehman_results/index.htm?cnn=yes
2. http://www.bloomberg.com/apps/news?pid=20601109&sid=aBl0gjJSBtEg&refer=home
3. http://wakeupwalmart.com/news/article.html?article=1585

IOD
Short COF and BAC:)

For the Record

Brian A. Davis'
Weekly Stock Wrap

Stock P=Put C=Call	Purch. Date	Purch. Price per share	Friday Close 6/6/ 2008	Net Gain/Loss
BAC 1/30s P	6/4/2008	3.00	3.65	22%
XLK 1/25s C	5/22/08	1.70	1.90	12%
TRLG 10/22.5s P	5/14/08	3.20	2.20	(31%)
COF 1/50s P	4/28/08	8.10	9.50	17%
PQ 10/20s C	4/15/08	2.60	5.60	115%
NCC 10/10s C	4/09/08	1.30	.05	(96%)
NCC 10/8s P	4/07/08	1.55	3.20	106%

*Note highlight denotes recent transactions.
**Please accept my apology for formating.

The Weekly Stock Wrap will be done in this format, until a better one is found.
BAC
After my last Seeking Alpha article "It Ain't Over Til It's Over", I made a case against banks which have a considerable exposure to credit cards. I noted that BAC is the world's largest underwriter of credit cards. On June 2nd, Standard and Poors revised its outlook to a negative. The revision reflects continued weakness in the financial sector with the possibility of additional write-downs. Moreover, more questions are being raised about the less diversified banking models. (1) The 1/30 put has earned 22% in two days...I'll take it.

XLK
Rates will be kept low for businesses as we continue experience all the effects of a downward business cycle. Like Darwin's Theory of Natural Selection where only the strong and those most able to adapt will survive, the same case can be made for business. Successful companies will innovate, and evolve through the down cycle, and XLK represents an excellent basket of stocks that are positioned to benefit in this environment.

TRLG
This one may have been a mistake. A number of pundits are ballyhooing it. The company caters to the higher end customer with expensive clothing. In order for the company to be successful, it will need additional help from the masses. Look for this company to turn back into the teens by August. (2)

COF
COF is a company that is well positioned for the squeeze play. High credit card and auto loan exposure to the sub-prime market is always a risk. However, the onslaught of unemployment numbers, default rates, gas prices, commodity jolts, tighter underwriting standards, and banking jitters is enough to send this one into a tailspin. (3) Horowitz has it right!

PQ
With an itchy trigger finger, I contemplated dumping PQ this morning. After all, at one point in time it was trading at 6.60 this morning. In a phone call to the company, I inquired about the company's strength of production...oil or natural gas. Natural gas still has legs and should run a bit longer.

NCC
A strangle was made here. Calls at 10 and puts at 8. While the call is D.O.A., so far the strangle was successful. A double digit gain is a double digit gain.

The Truth Police
The Truth Police will be monitoring comments made by Thomas Lee on Bloomberg TV this afternoon. According to his analysis, Lee suggested that the SP 500 will have triple digit growth to 1,450 by the end of this year. He also suggested plays in financials, oil and consumer discretionary spending. (4) Should this be the case...let's track it here. I would like to be the first to recognize Let's put Lee into a purchase of:
XLF 23.33
XLY 31.26
XLE 86.02

Sources Cited:
1.http://www.streetinsider.com/Press+Releases/UPDATE:+S&P+Issues+Negative+Actions+on+
Investment+Banks+(LEH,+MER,+MS,+BAC,+JPM,+C,+WB)/3705220.html

2. http://caps.fool.com/Ticker/TRLG.aspx

3. http://www.thedisciplinedinvestor.com/blog/2008/04/11/
capital-one-misundrstood-by-bulls/

4. http://www.bloomberg.com/apps/news?pid=20601087&sid=aNrvd_rk.PUs&refer=home

It Ain't Over Till It's Over: Financial Fallout, The Dirty LittleSecret, and Housing Hardships,

Financial Fallout: We've Found the Bottom...and continued to dig...
"I think what keeps some investors awake at night is not just so much the bad news that’s currently priced in to current valuations in some of these stocks, but what may come next...and that seems to be another shoe that has yet to drop." (1)
John Brady MF Global

Lehman Brothers (LEH) has shaken the financial markets again, when only a few weeks earlier many of the analysts claimed that the financials bottom was hit. That was about the same time when the table was pounded on XLF (now down an additional 5%), and RKH (with a loss of over 10%). Now, I'm not the expert but it is increasingly obvious that many of the professionals are not experts either. According to Dennis Gartman, Founder of the Gartman News Letter "I’ll be honest, I'm short all the bank stocks, because I think Lehman's in trouble, and it's not going to end for a while.” (2) LEH "rallied" today with rumors that a partnership (someone with money) maybe be willing to "team up" with this albatross. More than likely, LEH will be down again tomorrow. Down 10% two consecutive days, then a 3% up-tick on day three means NOTHING. One could only guess the sheepish grin Mr. Einhorn from Greenlight Capital (who is short on LEH) is wearing today!

Credit Card Companies (see over 150 choices at www.creditmall.org) deserve additional redress at this juncture...as they could well be the next "dirty little secret" on Wall Street. In an article entitled The Next Credit Crisis: Beyond Their Means, Jeff Cox underscores the credit card boon that could easily become a bust. (3) In the short term, card issuers are experiencing an over-whelming demand. The smart banks have made appropriate underwriting revisions while others banks simply require applicants to a have nothing but a pulse. Companies like V and MA while not directly exposed to the risk of dead-beat card holders, may run the risk of a dried up credit market in the United States. (4) During the merger mania period, JPM and C have picked up some wonderful banking assets, but also some of the weaker credit card risks as well. BAC went as far as buying up Cleveland based MBNA (who was a leading credit card issuer) making them the largest credit card underwriter in the United States. (5) Capital One Finance (COF) could well be left holding the bad in this quartet. As Scott Black of Delphi Management in Boston, referred to COF "an accident waiting to happen" because of the high proportion of sub-prime loans. (6)

Housing Hardships:
LOS ANGELES - Ed McMahon, who for decades appeared as Johnny Carson's sidekick on "The Tonight Show," is fighting to avoid foreclosure on his multi-million dollar Beverly Hills home, according to published reports. (7) In this case, McMahon is recovering from a broken neck, and regardless of his income level should have some type of a safety net so the house is not lost. However, McMahon is over $644,000 dollars behind in taxes. The house is listed for sale at a cool $6.25 million, and has been on the market for two years.

Recently, the New York Times published at article entitled: The Trouble in Housing Trickles Up.
The national mortgage delinquency rate is currently 4.35%. With increased inventory, slowing hobs, and a number of ARM's coming due, things look particularly weak for XHB, PHM, and other builders like KBH.

In conclusion, the current economic environment highlights a convergence of economic perils. While Big Ben Bernanke has pledged to protect the dollar, he has a considerable amount of work before him. While many analysts, economists, and political leaders are whispering the R word in inner circles, it is becoming more apparent that the man on main street may be able to call a recession easier than the man on Wall Street.


Please note the area where McMahon's home is located.(8)


Sources Cited
1. http://www.cnbc.com/id/24966373
2. http://www.cnbc.com/id/24966373
3. http://www.cnbc.com/id/24948627
4. http://www.msnbc.msn.com/id/23257741/page/2/
4. http://www.creditcards.com/For-Issuers-Theres-Plenty-of-Room-at-the-Top.php
5. http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=195
6. http://news.yahoo.com/s/ap/20080604/ap_on_en_tv/people_ed_mcmahon
7. http://www.nytimes.com/2008/06/01/business/01town.html?_r=1&oref=slogin

Week and Wrap

Does anyone remember this sign above Municipal Part Stadium? I can remember Opening Day in 1977...we were in general admission seating. I saw more of a steel beam than I did of the four double plays the Brewers turned on the Tribe that day. Can you say Andre Thorton? What a great role model he was for kids as he still serves in various ministries in the Cleveland-Akron area today!

Market Watch (Five Day Trading Range)
XLF Financials weekly trading range 24.33 to 25.18 Friday close 24.76
XLK Technologies 24.32 to 25.42 close 25.35 BOUGHT 1/25s call
XLP Consumer Staples 28.05 to 28.51 close at 28.49
XLV Health Care 31.47 to 32.18 close at 32.12
XLB Materials 43.11 to 44.79 close 44.45
XLY Consumer Discretionary 31.78 to 32.60 close 32.49 MISSED 1/32s @ 2.15 Put
XLI Industrial 38.06 to 38.99 close 38.84
XLU Utilities 40.81 to 41.61 close 41.38
XLE Energy 88.52 to 85.02 close 86.00

Movement is the key for these SPDRs. Energy stumbled a bit this week in part to an price manipulation inquiry. As mentioned in previous articles...the stock markets in general are to a degree all about manipulation. Energy prices however allow a perfect time for a bit of DC style grandstanding... Look for energies for a 3-5% move up or down next week. (1) A number of the CNBC crew called the top of oil which invariably means that oil still has additional upside potential. The consumer may be taking on water, but evidently is not dead. However. depending on spending habits...for 10-15 % of the population the stimulus checks won't be enough. (2) That is part of the reason XLY should see some additional movement by January. Last, the weakened state of the U.S. dollar (Currency traders can say whatever they won't about the dollar's strength) is just taking a temporary breather. XLF (didn't someone say it was time to buy a couple of weeks ago?) was not helped out by KEY Bank's warning that losses could "double" ... this also did not bode well for RKH which has a beautiful downward movement on its 200 day average. Look for at metal prices next week. It appears that a sell off may be a bit over done at this point...(London Metal Charts are just ugly)..... VGPMX continues to hold its own! Is Zeus , AKS, and CLF still a deal? I would have to think so!!! Private equity investors are increasing a stake in CLF as I write. FSLR could well be an ideal candidate for a strangle. The volatility is there. Five day high of 278. Low of 252. Currently 267.

Race for the Cure
Is there a more noble organization? The number of people who have cancer is just crazy. In a recent conversation with Dr. Chad Jacobson (University Hospitals Rainbows Baby and Children's Hospital) I asked his what it the real cause? Genetics? Food supply? Environment? Dr. Chad suggested that all plays a factor. We pray for those who are battling cancer. At one point in time, we found ourselves listing about 6-7 people we knew... That's just crazy! We lost Aunt Sandra three years ago this summer...and I can assure you that she was the finest person I knew!

Tribe Talk
The Cleveland Indians have golden opportunity to pull themselves out of self-destruct mode by opening an 11 game road trip against the Royals. The Royals have a .389 winning percentage...and one would think it is the perfect team to start a road trip with... I'm looking forward to seeing Ben Francisco get some at bats, Casey Blake to get hot, and the rest of the squad to get out of their hitting funk. My original hope of being .500 by Memorial Day did not materialize. While it was a legitimate call. Early May appeared to be so promising, it now looks as the small leak in the dike may get plugged. June...yes June is another month. After all, the "real season" starts after All-Star Break right. Maybe .500 going into the break...that would be a great spot. Let's [ray that the rest of the Central does not build an insurmountable lead... Cliff Lee 8-1! Pride pulled the squad together last night.

Clicks
My latest SA article, What's New for Credit Card Companies helped earn an additional 550 clicks ( nine applications) to close as 10707. This number is well below my expectation level suggesting additional exploration into other sites for marketing content. New posting sites needed... Passive...semi-passive residual income ideas always welcome...

Sources Cited
1.http://articles.moneycentral.msn.com/Investing/JubaksJournal/TheEndOfTheOilStockRally.aspx
2.http://money.cnn.com/2008/05/09/news/economy/rebate_poll/index.htm?postversion=2008050912

Is Profit a Dirty Word?

The old saying was that profit isn't a dirty word... On Wall Street, if you take a chance to make a few bucks on a risk, then it should be rewarded... At least that's what capitalists have been doing for years. Here is where I am with a couple of items in portfolio one and two.

In my portfolio I have the following plays running Portfolio One:
SPDR Tech Call 1/25s (up 10% since purchase last week)
TRLG PUT 10/22.5s (down 5% since purchase)
COF PUT 1/50s (up 10% since purchase)
NCC PUT 10/8s (up 60%)
PQ Call 10/20s (up 25% since purchase)
NCC Call 10/8s (down 97% since purchase)

In the 403B Portfolio Two
I still have 80% of my assets in VGPMX (Precious Metals and Mining). VEURX (A beaten down European Stock Fund) and VEIEX (Pacific Rim...Emerging Markets) both have a 10% allocation. (This last two were made as of 5/21.

In a recession, it is my belief that companies will look to innovate. I picked up the SPDRs last week on a down trading day(I have a fundamental belief that it is where you buy that ensures profit...not always where you sell), and with a bit of luck will see this bad boy run through July. TRLG is a stock his has had its fair share of volatility. It traded as low as 13.5 this year, and up to about 26.00. Currently I am down but will look to increase this position as it will hit a resistance point in the near future. COF is a loser...it was down again today, and only saved by a durable goods order. There should be a shake out in this stock in the near future. Credit card companies will try to dump the dead beats customers, and retain the winners. Much easier said than done. PQ is a kicker...up 80% at one time, I let this slip back to a point where I am actually looking to increase this position as well... Lesson learned here...Profit is not a dirty word...should have taken the money. No sweat though, I am counting on another excellent quarter from PQ and an increased demand for domestic oil...and better profit margins. NCC call is D.O.A.. It is one of few losers I had...and thus deserves further analysis. My reason for selecting this stock in a strangle was quite simple. I got caught up in the hype of this company going belly up. While I still believe NCC will get the snot beat out of it this summer, I expected more pronounced volatility (that is the key in a strangle)...For my own self-interests, I would love to hear a story about the C.E.O. being investigated for misappropriation of company assets like Tyco's Dennis Kozlowski...but Raskind is a straight shooter and a pillar of the community. I'll have to rely on the greed and stupidity of the mortgage business, coupled with slowing revenue in other areas. (I'm sure Raskind and his former boss Daberko knew nothing about that huh?) And they couldn't wait to get into the "hot markets like Florida?" Maybe just maybe a Presidential VETO (which thus far is likely after all what does Bush have to lose) on the financial package that is sailing through Congress will shake this stock up a little more! The banks will refuse to renegotiate loan deals with distressed buyers(see my blog entitled Greetings from D.C.. Selfish? Nope...just a realist here! The financials will want a better deal...

IN Trade...
Mild disappointment with this lovely organization because I think McCain is a slam dunk in the Fall Election...Currently trading at 38.00. Unfortunately, I cannot use their credit card processor as U.S. companies have certain regulations that will not allow certain time of gaming activities on our cards. I will either send a money order...personal check...or a wire. I do not like the idea of giving anyone my bank account number.

Traffic Update www.creditmall.org
The Article I submitted for SA was published. (For those of you who are counting it is my sixth.) My traffic "hit" numbers as of 8:52 EST are 353 since Tuesday morning with a click through ratio of about 5% (decent for industry standards). However, I am disappointed in the placement of the article as Big Ben's Credit Card Moves was placed under the "Editor's Choice" column. What's Next for CC Companies was simply listed under my site. That being said, the article still appeared on Yahoo Financial Blogs. I am interested in finding other financial sites that will receive submission article for additional exposure. This is a concept that should be explored by all readers of this site.


Tribe Talk
At last report Eric Wedge was looking for a gun to end the misery. Hafner (injured)...at least that is the story for now...If it is not the bats it is the bull pen. It is difficult to watch a team squander so many close games...especially when the starting pitching is looking pretty solid. In my humble arm-chair manager opinion, some senior leadership is desperately needed. Like football great Knute Rockne said "Winning is a habit...unfortunately, so is losing." The Cleveland Indians should not be allowed to get into the habit of folding in pressure situations. Pretty soon, scouts will need to find a Roy Hobbs type to get the ball rolling... Maybe the Tribe should talk to Tony Gwynn to be our hitting coach...something.

Greetings from D.C.

Dear Readers,

I can honestly say that Steven Latourette (14th District, Ohio) is doing a nice job in Washington D.C. The fact that he went to exhaustive lengths to read and answer my letter of inquiry shows me that things are not totally broken in D.C..

I am glad that he is no the Financial Services Committee and has a pulse on the current situation. The fact that he and his fellow Congressmen are holding hearings on the BSC bailout by the Fed is a good sign, as he suggested that some heads might roll on this one.

Interestingly enough, the esteemed Congressman even mentioned the name of Ron Paul when it came to fiscal responsibility.

While I am not totally convinced of the legislation on housing, there seems to be an attempt to remedy the situation. I believe the President will have no problem vetoing the bill if it is too radical. The bill, when explained in LaTourette's terms suggested that banks and financials will face another series of write-downs before the government extends financial assistance to home buyers.

Of course we fall back into the argument that why do any of these home buyers deserve any help? And the response (if I am reading it correctly) is that there is a general concern that the financial deadbeats could have a domino effect on neighborhoods and effect property values. That's when all of us move to Australia to avoid the real fallout of busted home equity appraisals and a general devaluation of property.

The credit card companies are going to feel a pinch here as well. Not only is there impending legislation from Congress...and another set of hearings to take place. The Fed will also be made fully compliant to Regulation Z, or what we commonly refer to as TRUTH in LENDING. My fear is that this will create another paragraph on a disclosure statement that is already over-loaded with information. Maybe we need financial and legal training in our schools...

In closing, the Congress even supplied me with a direct contact number should I have additional questions or comments. The following is a scanned copy of the letter...

BD

COMMITIEE ON TRANSPORTATION AND INFRASTRUCTURE

RANKING MEMBER, SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

COMMITTEE ON FINANCIAL SERVICE

Dear Mr. Davis:

Steven C. Latourette

Congress of the United States 14^th District, Ohio

May 23, 2008

Thank you for passing along your thoughts on a number of issues that are critical to our economy. It was great to see you during your trip and I am happy to give you' my views on these

topics.

There is no question that the increased actions of the Federal Reserve need to be closely monitored by Congress. The Bears Steams package has become the symbol of this increased role and there are many questions that my colleagues and I have on this subject. In fact, Republicans on the House Financial Services Committee, of which I am a senior member, have called on Chairman Barney Frank (D-MA) to hold a full committee hearing on the Bears Steams deal and to examine what role the Fed is going to have in this recent economic slowdown. Additionally, I agree with my colleagues like Rep. Ron Paul (R-TX) that we need to take action on the devaluation of the dollar and address the overall lack of responsible saving that has plagued our country at both the corporate and personal level. That last point certainly plays along with your desire to see greater financial education at all levels in our schools.

As you may know, the House recently moved a substantial housing package that we believe will bring stability to the market, without exposing taxpayers to undue risk. The most important part of the package gives the Federal Housing Administration (FHA) the ability to insure up to $300 billion in restructured mortgages.

This voluntary program will call on lenders to reduce a particular mortgage and in return would get a federal guarantee on the reduce mortgage agreement. This will allow the borrower to have a lower fixed payment and hopefully give them enough relief to stay in the house. This program will be for primary residence owners only and the government will get a percentage of the profits when prices rebound and owners choose to sell. While the overall number appears high, the Congressional Budget Office has estimated the real cost over the life of the program should only be around $2.7 billion.

Another piece of legislation that should be included in the overall housing package that will be sent to President Bush contains $15 billion in grants and loans for states and local authorities to secure and maintain foreclosed properties. This will provide relief to responsible borrowers that continue to stay current on their payments. There is no reason these folks should lose significant

ROOM 2371
RAYBURN HOUSE OFFICE BUilDING WASHINGTON, DC 20515
(202) 225-5731

1 VICTORIA PLACE ROOM 320 PAINESVillE, OH 44077 (440) 352-3939

TOll FREE IN OHIO 1-80Q-447 -0529

TWINSBURG GOVERNMENT CENTER 10075 RAVENNA ROAD TWINSBURG, OH 44087
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Page 2

value on their property, because they are surrounded by foreclosed properties.

Finally, Rep. Carolyn Maloney (D-NY) has introduced a credit card reform package that will look to implement tighter underwriting standards and increase disclosures to consumers. We have only had hearings on the matter thus far, but there is a chance we could markup a bill on this subject in the near future. It is also important to note that the Fed is working on reforms to Regulation Z, which provides guidance and regulation to the credit card companies.

Again, thank you for your kind words and support. Please contact C,J. Lennon in my Washington D.C. office at (202) 225-5731 at any point in the future. As my staff designee on the House Financial Services Committee, he would be happy to discuss any of these issues with you personally as we move forward.

Steven C. LaTourette

Member of Congress

SCL/KO

Americans and Credit Cards

The Wave has Broken

For banks who rode the credit card wave to riches on the backs of sub-prime borrowers, it is time to find another revenue source. It appears that the consumer may be tapped out. "Consumer sentiment as measured by the Reuters/University of Michigan index fell sharply in early May, to 59.5 from April's final reading of 62.6." (1) This poll surprised analysts who expected only a .1 percent in drop from April. The stimulus checks, which were intended to "jump-start" the economy have gone or will to to one of three sources: 1. Gas Stations 2. Service Credit Card Debt or 3. Service Mortgage debt. Regardless of amounts, stimulus checks have not had a positive influence on consumer sentiment.

According to Dean Calbreath in San Diego. "On average, Americans owe $2,342 per person on their credit cards alone, according to TransUnion, a Chicago-based credit tracking firm. Credit card usage has been climbing since the housing market went south, since homeowners can no longer use their equity to finance major purchases." (2) Some savvy collection agencies have used more aggressive techniques to claim portions of stimulus checks before they are spent. (3)
At one time, increased use of credit cards would have been a bullish sign for companies. However, banks are now scrambling to limit exposure to "bad" borrowers.

Ye of Little Faith
Banks are increasingly unwilling to extend "risky" credit due to an increased recessionary sentiment. This is part of the reason banks have backed away from the student loan business.
According to the Fed's Loan Officer Opinion Survey from April " On net, about 25 percent of domestic banks—up from around 15 percent in the January survey—expressed a diminished willingness relative to three months earlier to make consumer installment loans. About 45 percent of domestic banks—up from around 30 percent in the January survey—reported tightening lending standards on consumer loans other than credit card loans. " (4) While the Fed has gone to great lengths to increase liquidity, it appears bank have little faith in that liquidity to the consumer.

The Good News
These figures suggest that banks will be fighting for customers who are a good credit risk (700 or above credit score), as opposed to those who fall into the sub-prime category. As banks continue to play a shell game with the best customers, consumers who have good credit may be the winners in the end. A survey of www.creditmall.org suggests that every bank wants a consumer who is deemed as a good risk. All credit card underwriters are after customers with the best credit score. Good credit scores are rewarded better now, than almost any other time in history.

Here are some of the following offers banks have extended to consumers with excellent credit:

1. Credit cards from 6 to 15 months with 0% APR
2. Credit Cards with no annual fees and special offers.
3. Credit Cards with lowest APR on balance transfers.
4. Credit Cards that save on gas purchases.

Here are the offers banks are "giving" to consumers with poor credit:

1. Prepaid Credit Cards.
2. Credit Cards for those who have poor credit. (Be sure to read the fine print.)
3. Secured Credit Cards.
4. Student Credit Cards. (Be sure to read the fine print.)

In conclusion, credit card companies are in a mad scramble. Companies are tightening lending standards to those who have questionable credit histories. There is a growing gap between the types of credit card offers that are available for those who are deemed as a good risk as opposed to those who are in the "Sub-prime" categories. There had never been a better time to be a consumer with excellent credit. It is about time that those who have the best credit are rewarded.

Implications for the Credit Card Industry: A Wipe Out?
V, MA, DFS, and to a lesser extent AXP will see less people applying for plastic in the United States. While V and MA offer the services end of a card, tighter standards from banks will make it more difficult for consumers to get plastic. This will influence the N. American business operations. Also, the United States is the most profitable market as well. Banks that have a substantial exposure to credit cards may have problems as well. Bank of America (BAC), J.P. Morgan Chase (JPM), Citi (C), American Express (AXP), and Capital One (COF)must refine business models and evaluate the criteria of a good customer in light of new recessionary type data. Like other banks HBC has hedged its bet by asking "at-risk" borrowers to pay a one time acceptance fee. This organization also enters cardholders into a lottery type drawing...(5) While National City Bank's (NCC) credit card business is limited, there is good reason to believe that it's bottom line will not be helped by this division of business.

Tribe Talk...
Ben Francisco...can you fault him for a big E at the critical moment of a game? Regardless it is darn tough way to lose. Now a big...did I say big...HUGE series with the White Sox. This is a great opportunity to make up some lost ground in the AL Central. It could be a huge swing in momentum... Speaking of swinging...someone should make sure that Travis "The Whiffer" Hafner is not using Indiana Jones' whip to hit the ball... at least some contact dude! I was less than excited to see Borowski come back. Maybe he will surprise me.

Traffic Experiment
This latest blog post on S.A. should serve as a baseline in directing traffic to websites. Should this endeavor prove success...it should serve as a spring board for future entrepreneurial efforts. Currently, the counter is a 10256 at credit mall. Good numbers would be a hit count at somewhere in the area of and additional 1500+ by Friday...that is if I am published again.


Sources Cited
1. http://www.forbes.com/markets/feeds/afx/2008/05/16/afx5018916.html

2.http://www.signonsandiego.com/news/business/calbreath/20080525-9999-1b25dean.html
3. http://blog.stopccdebt.com/?p=130#more-130
4. http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200805/fullreport.pdf
5. http://www.msnbc.msn.com/id/23257741/page/2/

Sources Referenced
1. http://www.cccsso.org/default.asp?pg=Statistically%20Speaking
2. http://news.yahoo.com/s/nm/20080524/bs_nm/buffett_us_recession_dc