Wallet Watch

Well, I’m just getting back in the saddle of walletwatch, and of course the big issue in banking — and in all news, of course — is the $700 billion bailout plan of Wall Street. Of course, the bill just barely failed earlier today. (I’m officially with those who declare John Boehner and his Republican colleagues in the House the “Caucus of Crybabies,” claiming that a little speech by Nancy Pelosi made them not want to vote for the bailout. But I digress.) During the negotiations of the bill over the past 11 days, it has been hotly debated as to whether bad credit card debt, bad car loans, and other types of debt ought to be among the bad assets that lenders can discharge.

Myself being someone who agreed with those saying that escalating defaults on credit card debt could be the next subprime disaster, I initially assumed that bad credit card debt ought to be eligible to be bailed out. However, a Moody’s report that I received from a friend with a subscription changed my mind. Securitized credit card debt — despite the fact that defaults are at their highest amount since the new bankruptcy law went into effect at the end of 2005 — are still a safe bet. It is home mortgages, in fact, that are still front and center in this crisis. The latest figures from the American Bankers Association show that one in 11 mortgages is delinquent or in foreclosure. I’d say that’s a pretty serious problem.