Having 40 years of lending experience, including 35 years of C-level experience overseeing lending at two different credit unions, I can safely say I’ve never seen a set of economic conditions like what we’re experiencing now. Whether it’s the rapid rise in interest rates instigated by the Fed, a widening of the gap between the haves and have-nots (perhaps partially explained by this post I made last month on LinkedIn) along with the lack of affordable housing, this is all new to me, as it is to you.
Yet the most perplexing of the economic conditions I’m witnessing now is the rise in consumer credit losses. I’ve never seen losses rise so quickly in such a short period when the country is not experiencing a recession and job losses. About six months ago, I jokingly started calling what Ent Credit Union and all lenders are experiencing a “consumer credit recession.” Except now, I’m not joking: This decline in consumer credit performance is unprecedented. Here’s my best diagnosis of what’s driving this degradation of consumer credit performance.
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