Inflexible friends Credit cards have been on the horizon for a while as the next sector to be hit, crunchwise. Dare we say credit card debt might even be a subprime bubble in its own right? UBS is certainly thinking that way. An equity research note from the Swiss bank on Monday cut the rating on three US credit-card giants - Amex, Discover Financial and Capital One - to âsell.â Ostensibly, the reasoning behind that, an expectation ofâ¦ â¦moderate consumer-led recession and the likelihood of rising unemployment, the primary driver of credit losses in this industry. The interesting point though - and perhaps the most timely - is the fact that UBS also feel that a good proportion of credit-card debt is, in effect, subprime - reflecting, â¦a degree of loosening underwriting standards at the trough of a credit cycle. Familiar territory. Amex, Discover and Capital One all suffered from nasty falls in Monday trade. Amex down 3.9 per cent, Discover down 9 per cent and Capital One down 7.5 per cent. Banks are indeed pulling back on lax credit-card lending quickly. Flexible credit no more. On Friday Citi wrote to 160,000 holders of itâs Egg credit cards in the UK informing them that their cards would be cancelled in 35 days. Stateside, the New York Times ventures in with a broad picture of the pay later credit-card boom in the US. And the Fedâs survey on banksâ lending practices bears out a belt tightening: about 30 percent of respondents noted that they had reduced the extent to which such loans were granted to customers who did not meet credit-scoring thresholds; Just like mortgage debt, of course, credit card recievables are building blocks of the financial world. There are just as many, if not more, off-balance sheet bank ABCP conduits out there with consumer debt in them as MBS. http://ftalphaville.ft.com/blog/2008/02/05/10714/inflexible-friends/ No more flexible cards ? Outsch ! How shall I pay my gasoline bills ?