James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

The decision of the 11th biggest U.S. credit card issuer Advanta to pull all of its credit lines from one million customers bodes poorly both for the economy and the banks.

You can’t really blame Adventa, which specialises in credit cards for small businesses, for closing its credit window: uncollectable debt reached 20 percent at the end of March.

Just compare that to the loss rates, two year cumulative loss rates mind you, that the U.S. used in the banking stress tests: 12-17 percent in the baseline scenario and 18-20 percent in the more adverse one.

Advanta is offering $1.4 billion to buy back loans it securitised, but for 65 to 75 cents on the dollar, an indication that things in its portfolio will get worse from here.