This past Friday, shares of credit card lenders fell for the second straight day. According to analysts, card issuer stock prices have fallen across the board in response to American Express’s announcement of an increase in its ”loan loss reserve” amounts as well as the recent housing slump that’s taking a harsh toll on the American consumer.
The last time the US ran into recessionary issues, American Express ultimately had to write off 6% of its loans. The amount the company is currently looking at writing off is anywhere from 5.1 to 5.3% and many analysts think they’ll end up having to write off an amount closer to the 6% written off in the last recession.
As a result of the announcements, the price on American Express shares has slipped by 10.1%. When all was said and done, the shares fell from $44.92 to $44.00. At one point during the session, the stock had dropped as low as $42.90.
Reports indicate that Discover Financial fell 53 cents, which was a 3.7% fall. JPMorgan also lost 47 cents while Citigroup Inc actually went up 45 cents.
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