“They say a fish rots from the head down. Unlike the 2008 financial crisis, this time I expect it is the Fed that will be held responsible for yet another debt crisis. Do not expect their independence to survive,” Edwards added.
Edwards cited data which showed that credit card charge-off rates at small U.S. banks had peaked to 7.9 percent. This is a level not seen since the end of the global financial crisis. Charge-off rates represent the level of debt that a creditor has decided it has no chance of collecting.
A similar but separate analysis measuring credit card delinquency also revealed an alarming spike at small banks.
While Edwards has often been seen as an outlier to wider market thinking, more voices have speculated that U.S. householders are seeing their finances stretched.
“All the data we’ve seen over the last few weeks has basically been that the consumer is maxed out, we’ve seen that in credit card loans as well, so I think the consumer is done spending the money,” said Steen Jakobsen, economist at Danish investment house Saxo Bank on Tuesday.
And a report from Chet Malhotra, from asset management firm TCW, has also suggested late fees, cash advance and over-limit fees in the U.S. are on the rise.