Plight of Subprime Lenders

Subprime lending isn't getting any easier. Even as many city and state legislators are picking on subprime lenders, Card Forum reports that federal regulators have formed a task force to study the impact of the recession on subprime lenders in mortgages, credit cards and other areas. The viability of the subprime market has been dependent on continued growth. The combination of the economic slowdown and state legislation directed at subprime lenders has curtailed that growth and, for some subprime lenders, triggered severe financial problems. These have been illustrated by the problems of NextCard, Inc. and Providian Financial Corp., among others. As a result, subprime lenders are finding that their interest costs on securitized receivables have risen to the point that the potential for further growth has been severely constricted.