FDIC Reports Late Loans at 17 Year High
I plan to write a more detailed analysis of this information later on in the week, but for now the story is that the FDIC is reporting that late payments on loans are at a seventeen year high. Additionally, retail deposit growth is declining as well, so banks are increasingly turning to foreign deposits for asset growth. Both of these data points have some larger implications, which I will address later on in the week.
But for now, the story is pretty clear: consumers are squeezed financially and are unable to service their debt and savings rates continue to decline. One question offered is, what is the long-term implication of this situation and what will it mean when these people hit retirement age? Something else to consider is the impact on the credit markets and bank earnings, because if banks have fewer deposits to fund their lending and investment activities, it will only increase their capital costs and/or cause them to tighten up lending standards.
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