Credit Where It’s Due

CREDIT WHERE IT’S DUE….This is sweet, isn’t it?



Well, why not? One of the things that constrains card issuers from preying too aggressively on poor credit risks is the knowledge that their victims might go bankrupt and not pay their bills. Banks have very sophisticated models for this kind of thing, and calculating their likely losses makes them think twice about just how hard they pitch their wares to the bottom of the market.


UPDATE: Via Megan McArdle, Yves Smith offers up another potent possibility: that the subprime lending bubble was partly caused by the bankruptcy bill in the first place. After the bill passed, consumers who were desperate to avoid the new, more onerous bankruptcy provisions ended up increasing their use of subprime cash-out refis to keep themselve afloat:



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