Credit Cards, the next Scare?

" Like the next flight to the US financial system could come. From credit cards already basic consumer groups have teamed up to form a plan. That will forgive debt of some trouble consumers. Scott Talbott a senior vice president for government affairs at the financial services roundtable a group that represents large banks. Scott how likely is something like this to happen."

" Well it applied to the government to remove regulatory barriers to allow us a new option. -- up to allow banks to write off or write down or discharge. Credit card balances for at risk borrowers. It is has to go through predatory approval process he would take a little bit to get there. But if we if we're successful and the banks are going to have a new option to write down some credit card balances for the most at risk borrowers. So this is sort of this sort of accounting change so how would -- impact of corporate earnings. And also balance sheets requirements and things like that. Several first off it's a win win. For the for the option for the cardholders get part of their credit card debt ridden off. And extended for five years and for the banks don't the value is want to get an opportunity to collect some of the money they may not get the minute get collect any on secondly. They get to wait to write off that loss and tell five years later which is beneficial banks are not looking for -- more losses right now."

" Just got I can understand at home and try to read negotiate a mortgage because that's where someone lives. But they don't think that someone that you bought too many flat panel TV aids you've bought two leading pairs of sneakers. We feel bad for you let us eat that -- every word is is moral hazard what does that come then or does that leave them apply anymore."

" Through these are extraordinary circumstances people are struggling to pay the mortgage are struggling to pay they're auto loan. But targeted a credit card this is industry's attempt to help help borrowers and ease some of the burden and given the chance. To repay the by using some of the payment restrictions. And it also helps us by getting a chance. Pressed to collect some minor and not otherwise collect. So this isn't about morality this is about extraordinary times and everyone's going through it and we're trying to do our best to help -- help to -- the borrowers apart Wednesday on the feet."

" Yeah we're always working but but Scott these times sort of became extraordinary if you will because spending got a hand. If you tell me that I have no limit my car let's -- my limit is ten -- but I know you'll get fifteen with a stop -- from back then about the future."

" Chair I this is is extraordinary process. And there is some changes spending habits of past to occur going forward but this point we're looking at record credit card data mean and the Fed estimates that over 900 billion dollars. And so this is a way to sort of bring it down. The other option here is going to bankruptcy which has its own moral risks to how we think these people out of that so -- based on board with this idea. For the roundtable represents the largest lenders and we're going to make it probably don't represent every single credit card bar so the program which is not up and running yet would be voluntary for each bank and bank by bank decision process. Okay we have a lot of things going on you've alluded to it already what comes first helping people renegotiate their mortgages are forgiven a credit card debt. They're working on simultaneous tracks we're working with the federal government as Peter just mentioned to trying to come up with a plan to streamline mortgages. While working on on this effort -- we get approval to start this pilot program on credit cards you working simultaneously. Everybody has beaten most borrowers have a home loan have a car alone have credit card debt you have to work them all together and -- to help the borrower. Speaking at a bar or are you going to do any thing is organization talking about doing and think from an educational point of view so that people don't get themselves. In this -- in this mess up again. Absolutely as part of the process. You must see a credit counselor and you'll gain a lot of education at that point. As part of the bankruptcy reform law 2005. There's a -- pre bankruptcy education staff and even after bankruptcy there's another education process in addition to which. The financial services roundtable just spent the entire year working on financial literacy. We had over 76000. Volunteers. Working hard to improve peninsula -- America as well as all the efforts and our member companies engage in every day. And those efforts will continue for the rest this year and well into 2009 okay thanks a --"