Barclays (BARC.L), opens new tab has agreed to sell about $1.1 billion of credit card debt in the United States to Blackstone. Banks globally have been making greater use of credit risk transfers to shed risk from loan portfolios, Reuters has reported, with investors sharing the risk of losses. (See Corporate home buyouts: homelessness, mortgage & rent crisis rising)
Barclays’ investment bank acted as an advisor to Blackstone on the transaction. (Reuters)
Blackstone’s investment has been made through insurance accounts managed by the company’s asset-based finance group. Barclays will continue to service the accounts for a fee. So both are profiting from poverty as well as lending a and in creating it. Recall that Blackstone is also one of the firms turning profits by increasing homelessness among the working poor, buying homes and then raising rents in the US and Canada. They are in the business of reselling those homes or raising rents–actions that naturally lead to foreclosures and homelessness, respectively.
The common denominator is the accumulation of wealth at the expense of creating greater poverty for the disappearing ‘middle class’, a phenomenon that is often discussed without reference to its actual causes.
“During our Investor Update, we said that we would leverage strategic partnerships to execute risk transfer agreements to reduce capital requirements. I am delighted to announce this first agreement in our U.S. cards book,” Barclays Finance Director Anna Cross said. (Reuters)
The move comes a week after Barclays chief executive CS Venkatakrishnan laid out a refined strategic vision for the bank, with an ambitious plan to return £10bn to shareholders through dividends and share buybacks. The goal hinges on a near 20 per cent increase in revenue in the next three years.
Barclays is relying on American consumers to help it achieve that aim and is targeting an $8bn increase in US credit card lending in the next three years. Selling existing debt to Blackstone will allow the bank to increase its lending capacity without adding to its capital requirements or risk. (FT)
As Westerners focus on wars abroad, it might be more pertinent to their own lives if they questioned local governments about lack of regulation and enforcement at home.
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