Credit Cards: Safe Haven in the Storm?

The slumping housing market and lingering credit crunch have pummeled financial stocks over the past year to lows not seen in almost two decades. Last year, banks were feeling the pinch from writedowns related to securities backed by mortgages and unsold leveraged loans. This year banks are getting socked in the stomach as a consumer-led recession results in the rapid deterioration in credit beyond just residential mortgages -- creeping into other consumer and commercial-related loans, such as credit cards and residential construction loans.

As a broad swath of banks and consumer finance companies begin to report second-quarter earnings results next week, profits -- if any -- will continue to be weak. Banks will be busy continuing to add to their pile of loan loss reserves, marking down leftover leveraged loans and mortgage-backed securities, and shoring up capital wherever they can, likely in the form of dividend cuts.

This week, TheStreet.com asked several high-profile equity analysts about how the credit crisis is affecting banks and other consumer finance businesses. In this third installment, Craig Maurer, an equity research analyst covering specialty finance and payment processing companies at Calyon Securities, weighs in on the big credit card processing firms. ...