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Buyers Rather Than Sellers Are Dictating Price

A report from the Wall Street Journal. “Fair Isaac Corp., creator of FICO scores, will soon start scoring consumers with rising debt levels and those who fall behind on loan payments more harshly. The changes are an about-face from recent years, when FICO and credit-reporting companies made changes that helped increase scores for some consumers. Lenders in recent years had asked the credit-reporting and scoring companies to help them find more borrowers. But lenders are also trying to balance the need to expand loan volume with a rising concern about the longevity of the economic recovery and whether credit scores are making some consumers appear more creditworthy than they are.”

“‘There are some lenders that see there are problems on the horizon in terms of consumer performance or uncertainty [about] how long this [recovery] is going to go,’ said David Shellenberger, vice president of scores and predictive analytics at FICO. ‘We definitely are finding pockets of greater risk.'”

The Greater Baton Rouge Business Report in Louisiana. “The Baton Rouge metro area saw a 43% uptick in foreclosure starts last year, the largest spike recorded among the nation’s largest metro areas, according to data released last week. Local mortgage dealers say the rise in foreclosure starts is a reflection of job losses and a struggling local economy. It’s yet to be seen whether 2019 will be an anomaly or the start of a bad trend.”

“Last week’s reports show Baton Rouge was one of five metros with populations near 1 million that saw a double-digit percent increase in foreclosure starts from last year, reporting a 43% spike in lenders starting the foreclosure process. The second-highest spike was in Atlanta at 25%; followed by Salt Lake City, (17%); Orlando, Florida (16%); and Portland, Oregon (16%). As a whole, Louisiana was among 14 states seeing a year-over-year increase in foreclosure starts at 11%, trailing Rhode Island (54%); Mississippi (39%); Georgia (24%); and Arkansas (14%).”

“Zillow listed nearly 560 homes under foreclosure or pre-foreclosure in East Baton Rouge Parish this week. Twenty-five of those are in full foreclosure, while the remaining fall under pre-foreclosure, which includes properties with scheduled foreclosure auctions. In cases where homeowners have high debt-to-income ratios, low savings, or made low down payments through federal programs like the FHA or rural development program, when that first roadblock hits, like a job loss, mortgage payments are one of the first things to go, says Assurance Finance CEO Kenny Hodges.”

From Mansion Global on New York. “The luxury residential market in The Hamptons closed out a lackluster decade in terms of pricing. In the final quarter of last year, 223 luxury homes, which accounted for 10% of the overall market in the area, sold for an average price of $6.2 million. The number of sales was 7.2% higher compared to a decade ago, while average prices declined 7% from the same time 10 years ago, according to the Douglas Elliman report.”

“A flood of spec homes and ultra-luxurious homes on the market also contributed to a downturn in pricing, according to the report. Compared to 2010, the listing inventory in the fourth quarter of 2019 increased 108% to 552 luxury homes. Buyers typically negotiated a 18% discount compared to a 11% discount in 2010. Although the luxury market in the Hamptons has been steadily slowing down since the peak in 2014 and 2015, the decline accelerated over the last year. Compared to the fourth quarter of 2018, the median sales price decreased 17.4%, while the number of sales dropped 12.9%, according to the report.”

From Curbed Boston in Massachusetts. “December surges in sales and prices don’t mean that the Boston-area housing market has stopped shifting in favor of buyers, according to a new report from the Greater Boston Association of Realtors and the Warren Group. On the contrary, if anything, the activity might represent a last hurrah for the housing-market boom in the region. Besides, the surges were due more to overall economic conditions and to another surge—that of new listings.”

“‘Home values have stabilized over the past year throughout much of the metropolitan area, especially in the mid-level and luxury markets, where the number of buyers and multi-offer situations has been on the decline,’ Jason Gell, president of the realtors association said. ‘As the market slowly becomes more balanced, buyers rather than sellers are dictating price.'”

From Mansion Global on California. “Los Angeles’s luxury new-build condos logged a robust fourth quarter of 2019, as the city’s residences embraced vertical living and the hefty discounts that developers offered, according to Douglas Elliman. Underpinning demand are greater levels of discount as developers use financial incentives to tempt buyers. The typical discount on a luxury new condo from final list price to sale price was a substantial 17.9% in the fourth quarter. During the same period in 2018, the figure stood at just 2.3%.”

“Across the existing luxury condo market, the market was similar, though the numbers were not as pronounced. Transactions rose 11.9% annually in the fourth quarter and prices jumped 12.5% in the same time. Typical discounts though, stood at just 5.2%. The high-end single-family home market was the odd one out in the fourth quarter. Despite a 13.6% increase in sales, prices failed to follow suit and dipped 3.5% at the end of 2019 to $9.6 million. Inventory meanwhile, rose 13.6%.”

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  2. ‘The changes are an about-face from recent years, when FICO and credit-reporting companies made changes that helped increase scores for some consumers. Lenders in recent years had asked the credit-reporting and scoring companies to help them find more borrowers. But lenders are also trying to balance the need to expand loan volume with a rising concern about the longevity of the economic recovery and whether credit scores are making some consumers appear more creditworthy than they are’

    ‘We definitely are finding pockets of greater risk’

    Yeah, and credit always tightens when it will hurt the most.

    ‘Zillow listed nearly 560 homes under foreclosure or pre-foreclosure in East Baton Rouge Parish this week. Twenty-five of those are in full foreclosure, while the remaining fall under pre-foreclosure, which includes properties with scheduled foreclosure auctions’

    Zombie shacks area statistic, shadow inventory is a conspiracy theory.

    ‘In cases where homeowners have high debt-to-income ratios, low savings, or made low down payments through federal programs like the FHA or rural development program, when that first roadblock hits, like a job loss, mortgage payments are one of the first things to go’

    I have documented zero-down, no-doc loans in the past year, along with happy lending to people right out of prison and illegal aliens. What could go wrong?

    1. May 25, 2018

      “In his corner of American finance, where hard selling meets hard luck, Angelo Christian is a star. Each time Christian sells a home loan, the company he works for, American Financial Network Inc., takes as much as 5 percent. Many of Christian’s customers have no savings, poor credit, or low income—sometimes all three. Some are like Joseph Taylor, a corrections officer who saw Christian’s roadside billboard touting zero-down mortgages. Taylor had recently filed for bankruptcy because of his $25,000 in credit card debt. But he just bought his first home for $120,000 with a zero-down loan from Christian’s company. Monthly debt payments now eat up half his take-home pay. ‘If he can help me, he can help anyone,’ Taylor says. ‘My credit history was just horrible.’”

      “Christian can do this kind of deal because he is, in effect, making the loan on behalf of the federal government through its most important affordable housing program. It’s a sweet deal: He gets his nearly risk-free commission. Taylor puts no money down. If things go south, the government ultimately bears the risk. Many borrowers ‘are living paycheck to paycheck and, if they lose their jobs, they go into default immediately,’ says John Burns, a housing consultant.”

      “One reason more borrowers may be stretching: Real estate prices are soaring again.”

      http://thehousingbubbleblog.com/?p=10443

      1. We’re coming up on two years since you first posted this link. Since then, I’ve watched house prices hyperinflate in the poorest of areas, with few jobs, and what jobs there are pay a pittance. I believe the majority of the loans are subprime. Despicable.

        And what’s their answer this time? Make the bubble bigger and more destructive. The FED is the most reckless economic terrorist we could possibly have running things. They should all be arrested. Every one of them.

        1. The FED is the most reckless economic terrorist we could possibly have running things.

          “The Creature from Jekyll Island” should be required reading by every American, especially the 99% who have been swindled by the Fed and its oligarch controllers since the former’s sub rosa 1913 founding by the robber barons of the era. Henry Ford was right: we would have a revolution before noon tomorrow if ‘Muricans knew how our financial system worked.

        2. Fed sucks balls. And I work at the fed. What i think a lot of ppl dont’t know is that only a very, very, very small number of fed employees have anything to do with actually setting monetary policy. Most fed reaearch economists would agree the whole thing has gone to shit (in my opinion). But they don’t vote. And the voters ain’t legit economists. Mostly they are commercial bank cronies—e.g. jerome powell is an attorney that worked for merryl lynch or something like that. Is he voting based on a nuanced understanding of contemporary macroeconomics, or which side his bread is buttered on? And you shouldn’t blame powell for this. Blame the institution. Absolute powe corrupts absolutely and all that.

          However, in defense of my profession, I wish most posters here would also learn that not everyone who puts “economist” on their linkedin is a bona fide economist. We real economists like to think that means you got a phd in this shit from a legit university. Getting an online accredidation don’t count (money can buy you a nice glossy piece of paper, but there is no replacement for low pay and long suffering). Sorry you zillow, redfin, et al “chief economists.” To be honest, I really do think that opinion is a bit elitist. But trust me, you can tell the diff in quality pretty damn fast if you are in da club, so to speak. It’s not that the fakers arent nice smart ppl (they are), but you can’t fake surviving a concentration camp, so to speak. And what doesn’t kill you makes you stronger.

          1. Thank you for this comment. I can only imagine your cognitive dissonance.

            What books would you recommend to the layman interested in understanding econ in order to approach the nuanced knowledge you guys slaved for (but hopefully got decreased tuition through TAship to examine)?

          2. Did Ben Bernanke and Mario Draghi, the respective architects of Quantitative Easing and Negative Interest Rates policies that ushered in the era of monetary policy quicksand we currently enjoy, not have PhD’s?

    2. Yeah, and credit always tightens when it will hurt the most.

      “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”

      ― Mark Twain

      1. “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)

    3. “FICO for the first time will place more weight on personal loans in a way that penalizes some borrowers. For example, consumers who transfer credit-card debt to a personal loan but continue to rack up credit-card balances will likely experience a bigger drop in their credit scores.”

      Hehe…the peeps with the leased cars and latest phones.

      1. “…leased cars and latest phones….”

        Maybe, just maybe, newly announced FICO revisions will help break the cycle of endless debt incurred by the least qualified and the least able to repay.

        Those jolly fellows in the REIConplex can’t be too happy about the changing financial landscape.

    4. That is an about face. FICO stopped reporting / considering tax liens a while back, maybe in the summer of 2018.

      After the whole Equifax debacle, more and more people are aware that it is a scam that these companies try to sell our own data back to us.

    5. FICO is irrelevant when they’re not even verifying income on over 90% of subprime auto loans.

      1. Many of these new cars can be disabled remotely, unable to be restarted, much like a cell phone with a defaulted contract (bad esn/imei).

        1. Harvey is a 1950 American comedy-drama film based on Mary Chase’s play of the same name, directed by Henry Koster, and starring James Stewart and Josephine Hull. The story is about a man whose best friend is a pooka named Harvey – in the form of a six-foot-3.5 in. invisible rabbit.

          https://en.wikipedia.org/wiki/Harvey_(film)

  6. ‘average prices declined 7% from the same time 10 years ago’

    Worse than 10 years ago. How was the shack buying in 2010?

    ‘The typical discount on a luxury new condo from final list price to sale price was a substantial 17.9% in the fourth quarter’

    I wonder what the decline was from initial list price? Man, there’s just tons of crater, not enough time to post it. Big things happening at the foreclosure auctions in AZ.

    2. The price drops for mansions in the Hamptons have more to do with Trump’s crackdown on SALT than with the general crater.

    3. “Big things happening at the foreclosure auctions in AZ.”

      Can you share details or is it too early? Are there bidders or does everything revert to the lender? Do they get through some of the long-delayed properties, or is it more extend-and-pretend?

      1. Im gonna take a stab in the dark here. The FOMO “we missed out” crowd is “finally” getting a shot at some “bargains” and buying up foreclosures for basically the same price as would anyone else that hunts bargains on the normal mls would. I have read some articles backing this but haven’t witnessed anything first hand. I may be way off and hopefully Ben can share. Personally, I think its still to early for any of these “supposed” deals to be had unless your a bank or RE mogul with insider deals. Pardon all my “s, im in a /s mood 😉

  8. These fake price markets should be rejected by the consumer.

    It use to be that you fellow consumer would reject fake pricing.

    1. “It use to be that you fellow consumer would reject fake pricing.”

      Yeah, well that was before No Child Left Behind did a number on them.

      Again, dumb ’em down, and profit.

      1. Also before people who embraced fake house and stock prices got to retire and those who didn’t didn’t.

  9. https://www.bloomberg.com/news/articles/2020-01-23/clos-are-packed-with-new-loopholes-triggering-investor-backlash?srnd=premium

    Allison Salas was taken aback.

    As she scanned the latest collateralized loan obligations to cross her desk last spring, tucked into the deal documentation were changes that let the managers of the CLOs swap one distressed loan for another without booking a loss. In other words, they could unload an asset trading at a mere 70 cents on the dollar, buy another troubled loan, and value it at 100.

    In recent months, similar loopholes have become more common, according to market watchers. Managers that assemble and oversee the securities are increasingly worried that a slowing global economy could spark a selloff in risky corporate debt, they say, and have been looking to give themselves more flexibility should things go south.

    1. “Whether these new provisions are designed to protect investors against temporary downturns or whether they’re simply an effort to protect manager bonuses is a matter of debate.”

      What a stupid statement. Of course these new provisions are simply an effort to protect manager bonuses. If you are dumb enough to believe otherwise then you need to come into my bank and be exposed to a session of my Dotted Line Special (a genuine E ticket experience).

      Be sure to bring with you a list of marketable body parts.

    2. Everything is fraud when it comes to Wall St. Top to bottom. After the past meltdown, everybody from CEOs of banks to brokerage houses to ratings agencies should have been arrested on fraud and racketeering charges. Instead, Obama befriended them so he could become a hundred millionaire.

      1. Obama was plucked from the most corrupt Democratic Party machine in the country and groomed by George Soros and Goldman Sachs to be their water carrier in the White House. He was bought and paid for by Wall Street from the beginning, and appointed corrupt AGs like Eric Holder and Loretta Lynn who would the Wall Street grifters could defraud with impunity. The Obamas now have a net worth in the tens of millions thanks to their services rendered for the oligarchy. Fauxahontus is masquerading as a progressive to exploit the Democrats’ leftward drift, but remains a crony capitalist to her core who will rival the Obamas and the Clintons when it comes to pay to play and influence peddling.

    3. I never did get a good handle on all these financial products. But if I understand this correctly, is this what you get when you buy “bonds?” You know, that safe stuff you’re supposed to be balancing your asset allocation with? Forget it. I don’t expect a return on principle, never mind return OF principle. I’m better off buying water rights or canned peas and AKs. At least those products have some value.

        1. Not that I know of. Canned goods only last about 2 years; you need to rotate them out. For long-lasting carbs, vacuum-sealed rice noodles and corn grits are probably best. For meats and veg, freeze dried single-ingredient #10 cans are best ($$$).

          3. My husband will refuse to eat or just throw out an item (like individual yogurts) if it’s one day past the date printed on it. Ticks me off 😡

      2. The money market is oaying same as a 2 year.
        what if inflation hit’s 2.5%?
        the fed doesn’t have much control on longer rates. They already bought everyones smelly mel mortgage

    1. This American Financing emergency loan presupposes that their credit card balances are up against their limits too. 🙂

    2. Let’s lop on a 0% down mortgage and these people will be just fine! I’m sure they can pay for a $10k roof just fine.

      St Bernard will get elected and pay for it all.

  11. Setting up my new laptop today, just installed the JT add-on for HBB. Thanks again to drumminj for creating this! 🙂

    2. Thanks again to drumminj for creating this! 🙂

      You’re very welcome. Please tip your host (Ben) if you feel you got good service!

      1. +1. Unlike Real Journalists and REIC shills in the corporate media who get their 30 pieces of silver from their oligarch masters for propagating lies and DNC talking points, citizen journalists like Ben have to count on those who derive value from the news and information they’re delivering. Ante up, Bitchez….

  14. Tesla will mark the beginning of the end for this bull market, warns Ralph Nader
    By Shawn Langlois
    Published: Jan 23, 2020 1:23 p.m. ET
    ‘Watch out, Tesla believers’
    Tesla shares — unsafe at any speed?

    Apparently so, according to consumer advocate and former presidential candidate Ralph Nader, who issued a stark warning this week, not only on the electric-car maker’s pricey stock, but on the stock market as a whole.

    That Nader tweet hit in the wake of Tesla (TSLA, -0.47%) topping $100 billion in market cap to become the world’s second most valuable car maker.

    “Deep in debt, selling less than 400,000 vehicles last year and challenged by several competing electric car models in 2020, Tesla’s stock valuation stunningly exceeds VW which sold over 10 million vehicles last year,” Nader added in a follow-up tweet. “Watch out, Tesla believers.

    Of course, his stance didn’t sit well with Tesla fans.
    …

    2. Any word on standardized and dependable swappable batteris scaled to payment? Charging faster getting a Big Mac? Refueling infrastructure? Mileage that didn’t cut in half for half the year in cities north of Key West?

      Nothing yet? Oh, well, maybe tomorrow. But gimme one of those cyberpunk bugout trux and a Purple for the covered bed. I’m gotta go get me a guy.

      1. “But gimme one of those cyberpunk bugout trux and a Purple for the covered bed. I’m gotta go get me a guy.”

        LOL. Huh? Purple….DRANK?

          4. Oil City is OLD lingo. Older than purple drank. Betabux is Apt 401’s, and I believe originated from the MGTOWs. Ah, good times…

      2. Yo dawg I heard you needed a charging station for your charging station so Xzibit’s gonna hook you up with a windmill for your Cybertruck. As you drive down the highway the fan spins and fills up the battery with da bling bling, dawg. Cruising past the charging stations LIKE A BAWSS.

        1. 😂 This plus the solar panels covering the bed and this triangle on wheels will never need charged.

  15. “‘There are some lenders that see there are problems on the horizon in terms of consumer performance or uncertainty [about] how long this [recovery] is going to go,’ said David Shellenberger, vice president of scores and predictive analytics at FICO. ‘We definitely are finding pockets of greater risk.’”

    Problems “on the horizon”? Delinquencies on subprime auto loans have been rising sharply for well over a year. This “recovery” is a chimera created by debt-fueled consumption and $90 billion a day (at least) in Fed funny funny pumped into the repo market.

  16. ‘As the market slowly becomes more balanced, buyers rather than sellers are dictating price.’”

    Buyers have always dictated the price. It’s just that during the peak of the bubble, buyers who got caught up in the mania were stupid and greedy.

  17. https://www.scmp.com/business/article/3047299/mainland-billionaire-cant-get-enough-uk-real-estate-record-breaking-london

    Even for London’s ultra-luxury real estate market, the price is sensational: more than US$262 million (HK$2.04 billion) for a 45-room mansion in Knightsbridge.

    For the buyer, Cheung Chung Kiu, it is not even his most expensive purchase. The chairman of C C Land Holdings bought a plot on The Peak in Hong Kong for HK$5.1 billion in 2015, a record at the time.

  18. Sent a $25 contribution to Bernie Sanders today. Contributing to Democrats feels icky, but the idea of crossing the lines to help monkey-wrench the corrupt corporate Democratic establishment is immensely appealing, and well worth the money.

    1. I received a text yesterday asking if I was going to support Bernie. I have no idea how somebody got my number, but rather than chastise them for bothering me on my “do not call/text” phone I decided it was a good opportunity to tell them exactly how I felt about Bernie.

      I first responded with “no, I would never vote for a candidate who embraces open borders and the giving away of American jobs to illegals.” They then asked who I’d vote for and I replied “any candidate who wants to protect American jobs and who understand that illegal immigration hurts the poor and the uneducated more than the wealthy. If Bernie really cared, he would understand this and not support policies which hurt the people he supposedly empathizes with. Instead, he just wants as many votes as possible.”

      They thanked me.

        1. Sounds like a Nigerian scam pitch. Although in fairness to Nigerian scam artists, they can’t hold a candle to the Democrats when it comes to fraud and general scumminess.

    2. I can’t seem to escape the advertising for Bloomberg. He sound like a moderate, but I braved his website. His policies are all very vague. He could very well be hiding a policy of open borders and UBI.

      The only thing I agree with is his tax on soda pop.

      1. Maybe it’s better to vote for the globalist oligarch organ grinder than the monkeys. At least that way it’s clear to everyone who’s calling the shots.

  20. 2015 – Patricia Janečková – Once Upon A Time In The West – Once Upon A Time In The West (E. Morricone)

    November 10, 2015
    Patricia, only 17 years old, sings on Veterans Day at the Rudolfinum in Prague, accompanied by the Army Band of the Czech Republic, conducted by Jaroslav Šíp. Patricia sings the theme song from “Once Upon A Time In The West”, a composition by Ennio Morricone. (Thank you, Dennis!)
    You can follow Patricia by searching on Facebook for: @patriciajaneckova.

    Patrícia Janečková (b. 1998) is a promising young Slovak soprano who lives in Ostrava in the Czech Republic. In 2011, at the age of 13, she released her first and until now only album. Her music is available as MP3 at http://www.amazon.com/Patricia-Janeck… and http://itunes.apple.com/gb/album/lasc….

    https://www.youtube.com/watch?v=SXbJYXKloYk

    1. “The 43 percent DTI standard came about after the goal posts were moved from the previous, long-held standard of 36 percent,” McBride says. “Now they want to just take the goal posts off the field altogether.”

      The Consumer Finance Protection Bureau is just another fake place to hire minority employees on welfare to work programs, child care on floor #5, life counseling on floor #4, safe space and comfort animal petting on floor #3, etc., and complete with phony statistics implying the program’s success.

    2. “Take two different borrowers, each with a 43 percent DTI,” McBride says. “One has a monthly income of $10,000 and the other just $4,000. The higher income borrower has $5,700 remaining after monthly debt obligations whereas the lower income borrower has just $2,280 left over. Through that lens, the lower income borrower might look riskier than a higher-income borrower with more financial wiggle room.”

      The lower income guy likely has fewer skills, and he is likely among the first to be cut when the pink slips start going out.

      1. Over the years I’ve seen plenty of $10K+/month people get a pink slip. And if they are middle aged it’s very hard for them to find another comparable job.

        1. Yep, churn ’em and burn ’em.

          Get them when they are young and dumb and exploit them to the max. Then dump their asses and higher a fresh batch.

          Rinse, repeat.

          2. A friend, who is in his mid 50’s was offered “early retirement” from his multinational employer. The offer is basically nothing more than a lump sum, about 2X of what the standard layoff package is.

            My friend reasoned that if he didn’t accept the offer, there was a high probability that he would be laid of anyway, so he accepted the offer. Then just a few weeks later his employer announced that 9000 would be laid off.

            Fortunately for him, his house is paid for and he is debt free. His only concern is paying for health insurance. He also inherited a few hundred grand from his parents and his 401K balance is pretty decent, so he and his wife will survive.

          3. Here’s a good read …

            Why Engineers Should Plan For Early Retirement career change

            This has become my advice to anyone who is young, regardless of profession: expect to become nearly unemployable in your middle age, so plan accordingly (save every penny you can).

          4. Here’s a good read …

            Gary said: “I just want to go on cheap hiking vacations the rest of my life and start getting high again here in Illinois on January 1 after abstaining for over 20 years due to random drug testing bullshit.”

            This!

          5. Here’s a good read …

            “Why Engineers Should Plan For Early Retirement career change”

            That was an interesting read particularly the comments. Thanks!

        2. “And if they are middle aged it’s very hard for them to find another comparable job.”

          Copy that. I was one of those $10K+/month people too, and my employer’s clients (government agencies) became overbearing once DJT was elected. I recall reading that General Norman Schwarzkopf was non-partisan…his career able to survive either party in charge. Having been a debt free homeowner since 2011, I was able to depart with a smile.

  22. Does it seem curious that gloomers are still out there, given that we have entered an entirely new era of continuous stock market meltup?

    2. Does it seem curious that gloomers are still out there, given that we have entered an entirely new era of continuous stock market meltup?

      I think we’re going to test the theory that it won’t collapse until everyone is all in. I think there are some who won’t go all in no matter what the news says. So will it levitate forever because of them? We’ll see soon…

  23. (yawn)

    Banks Are Handing Out Beefed-Up Credit Lines No One Asked For
    https://finance.yahoo.com/news/banks-raising-credit-card-limits-110000952.html

    (snip)

    It might sound like a risky strategy at a time when millions of Americans are drowning in debt: keep raising the limit on people’s credit cards, even if they don’t ask.

    But that’s exactly what big banks have been doing lately to turbocharge their profits, leaving customers with the potential to rack up even bigger monthly bills.

    For years after the financial crisis, Capital One Financial Corp. resisted that step for customers who looked vulnerable to getting in over their heads. In internal conversations, Chief Executive Officer Richard Fairbank characterized the restraint as a radical theology, in part because it went beyond post-crisis requirements, according to a person with direct knowledge of the discussions.

    But then Capital One — known for its “What’s in Your Wallet?” slogan — reversed course in 2018, after the bank came under pressure to keep revenue growing. The company’s revenue reached a record last year.

    The same reversal is playing out across U.S. banking, as more customers get unsolicited access to additional credit, in what’s becoming a new golden age of plastic. The goal: to get consumers to borrow more. The question, just like in the heady 2000s, is how it will end for lenders and borrowers alike. Research shows many consumers turn higher limits into debt. And the greater the debt, the harder it is to dig out.

    “It’s like putting a sandwich in front of me and I haven’t eaten all day,” said D’Ante Jones, a 27-year-old rapper known as D. Maivia in Houston who was close to hitting the ceiling on his Chase Freedom card when JPMorgan Chase & Co. nearly doubled his spending limit a year ago without consulting him. He soon borrowed much more. “How can I not take a bite out of it?”

    Truly, a nation of dummies.

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