| HeraldNet - Snohomish County's online news source |
 WEDNESDAY, FEBRUARY 10, 2010 4:44 am |
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Credit firms may forgive portion of debts Rather than allow card holders to walk away scot-free, a pilot program may reduce their debt by 40 percent. WASHINGTON -- With defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills.Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy. The new pilot program -- which the banks hope will become permanent -- could involve as many as 50,000 people struggling with credit card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower's financial situation, up to a maximum of 40 percent. "There's obviously a financial benefit to the financial institutions to step up to the plate right now," said Susan Keating, president and chief executive of the National Foundation for Credit Counseling, which has 108 member organizations around the country. "We absolutely support the proposal." In an increasingly tough economic climate, banks and other mortgage lenders already have been agreeing to modify loans of distressed homeowners to help them avoid foreclosure. Now, banks making credit card loans have reached a point where they can lose less by forgiving part of the debt than seeing the consumer walk away entirely. Credit cards -- the ubiquitous plastic rectangles that have become an integral part of American life and the economy -- now look to be the latest domino to drop in a financial crisis that started with subprime mortgages and continually takes new twists. Amid rising job losses, consumers -- even those with strong credit records -- have been defaulting at high levels on their credit cards. Banks already battered by the mortgage and credit crises are bleeding tens of billions in red ink from the losses. The largest credit-card banks each set aside between $1 billion and $3.5 billion in the third quarter for losses on card loans as their profits plummeted. |
- Sorry, Hawkeye; M*A*S*H gets bowled over
- Former Whidbey student shot
- County archive software paid for but waiting for set-up
- Ruling expected on Sultan beating statement
- ‘Roadkill’ caucus seeks a voice for centrist Democrats
- Police seek witnesses in two accidents
- PAWS calls out for critter care-givers
- Boeing has a busy test schedule
- Ex-Boeing engineer jailed for espionage
- Morning mystery: What happened to House Bill 3181?
- Lynnwood sets height limit on grass: 8 inches
(10) - State Senate votes to toss I-960's tax-raising hurdle (9)
- School levies in Snohomish County all passing, Marysville bond failing (6)
- A tidy lawn could be law in Lynnwood (4)
- County archive software paid for but waiting for set-up (3)
- Vote on school levies by Tuesday (3)
- Two suspects sought in Everett shooting that injured two (3)
- Lynnwood makes law against too tall lawns (3)
- Schools do well in levy elections (2)
- Snohomish County's bargain housing won't last (2)
- Jackson girls outlast Meadowdale owdale
- OBT raises barre in children’s program
- Junior firefighters
- School levies passing
- Mavericks topple Wolfpack
- Get a second look at Second City Feb. 13
- Sports Briefs
- Warriors advance 11 to regional meet
- Arlington's Cascade Valley Hospital celebrates expansion, national award and 100 years of service
- Business Licences Feb. 2010
- Technology tips for launching your own business
- Business Events Feb. 2010
- Tech Talk: No excuse today for going without a Web site
- State already raising fees and rates that restrict business growth
- Some legislators again targeting people’s initiative petition rights
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