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When there is blood in the water, it is only natural that dorsal finsswirl around excitedly. Now that Americas housing market is ailing,predators have their sights on the countrys credit-card market. Analysts atGoldman Sachs reckon that credit-card losses could reach $99 billion if contagionspreads from subprime mortgages to other forms of consumer credit. Signs ofstrain are clearly visible. There are rises in both the charge-off anddelinquency rates, which measure the share of balances that are uncollectableor more than 30 days late respectively. HSBC announced last month that it hadtaken a $1.4 billion charge in its American consumer-finance business, partlybecause of weakness among card borrowers. It is tooearly to panic, though. Charge-offs and delinquencies are still low. Accordingto Moodys, a rating agency, the third-quarter delinquency rate of 3.89% wasalmost a full percentage point below the historical average. The deteriorationin rates can be partly explained by technical factors. A change in Americas personal-bankruptcy laws in 2005led to an abrupt fall in bankruptcy filings, which in turn account for a bigchunk of credit-card losses; the number of filings would be rising again, whether or not overall conditions for borrowers were gettingworse. The industryalso reports solid payment rates, which show how much of their debt consumerspay off each month. And confidence in credit-card asset-backed securities ispretty firm despite paralysis in other corners of structured finance. DennisMoroney of TowerGroup, a research firm, predicts that issuance volumes for 2007will end up being 25% higher than last year. | 
