Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Meredith Whitney - Oppenheimer.
Meredith Whitney – Oppenheimer & Co.
One thing that really stuck with me at your semiannual meeting in February was the market decline you saw in consumer spending for the month of November to December. I know you said you didn’t want to do this but can you directionally comment on what you see in consumer spending? And, remind us, if you told us about the line issue in terms of cutting consumer credit lines, when that took place and if that’s accelerated throughout the quarter?
Daniel T. Henry
We saw a 300 basis point drop in December in the US consumer and small business and as I indicated in the first quarter we had a 300 basis point drop across various lines of business in the US compared to the fourth quarter. I’m not going to give information month-by-month, I think that’s probably too detailed but I would say the 300 basis point drop first quarter to fourth quarter is consistent with what we saw in December, so we’re seeing a continuation of that.
In terms of the line reductions that we’ve done with regard to certain lending customers, as soon as we saw the deterioration in credit we took a look at our credit policies and practices and we have heightened default rates across the board, we have also been surgical in terms of looking at certain geographies because default rates are higher in certain geographies. We’ve also looked at certain industries where they have weakness and in those we’ve taken special actions as well.
So, as soon as we saw the credit indicators start to deteriorate which was back in December and we’ve continued that really through the first quarter in total. So, the number of line reductions in the first quarter was significantly more than we would have seen on average in 2007 and we’ve seen probably fewer line increases.
We’re trying to be very focused on balancing and controlling credit properly. On the other hand we don’t want to damage the long term health of the business so really balancing long term considerations for customers with the desire to control credit in the short term.
Meredith Whitney – Oppenheimer & Co.
You’ve seen a flurry of large caps like yourself change their funding strategy over the last few weeks or augment their funding strategy over the last few weeks. Could you update us as to any changes that you see? Any tweaks you’d like to make to your funding strategy and any changes you see to your securitization strategy?
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