When U.S. regulators published the results of their own financial industry stress test in 2009, credit card issuers pointed at the results to justify sudden retractions of consumer credit lines. Liquidity requirements forced portfolio managers to reserve billions of dollars in cash instead of floating it on the credit market. Credit card issuers like Citi, Chase, and Bank of America instituted "follow me down" policies that moved some cardholders' limits to just above their balances.
Although some European officials have reported resistance from larger banks wanting to avoid similar public backlash, economists cited in the report note that European banks could have some surprisingly optimistic results. UK-based Barclays Bank and HSBC both own significant American credit card operations, while Spanish Grupo Santander has grown into one of the most powerful banks in the world through its recent American retail banking acquisitions.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.