Consumer Finance: Watch the Ripple Effects

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The U.S. expansion, now five and a half years old, is beginning to look a little long in the tooth. Still, fears of recession have subsided. Banks and their business customers are too busy trying to find workers to fill key positions. Indeed, anxiety over wage and price pressures and their impact on interest rates and interest rate risk have moved to the top of banks' radar screens. Credit people seem to still be tilting at windmills in regard to quality.

Except credit cards. The steep rise in delinquency rates and losses has captured everyone's attention. How big is the consumer debt iceberg and, when it melts, how many parts of a bank's portfolios will be flooded?

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