After having one of my credit card accounts cut by 50% I’ve been keeping an eye out for stories along the same lines and lo and behold, Bloomberg is reporting that Advanta will cease issuing credit!

By Sarah Mulholland and Cordell Eddings

May 12 (Bloomberg) — Advanta Corp., the credit-card issuer for small businesses, may leave 1 million customers scrounging to find new lenders and debt holders facing losses of 35 percent after the company shut down accounts to preserve capital.

Advanta will cease lending June 10 after uncollectible debt reached 20 percent as of March 31, according to a statement and filings yesterday by the Spring House, Pennsylvania-based firm. The lender earmarked $1.4 billion to buy back securitized card loans with offers of 65 cents to 75 cents on the dollar.

Did you read that bold part?  One MILLION customers will be cut off from their credit lines and this is supposed to help the economy?  Advanta usually extends credit to small businesses so I’m not sure if the customers are pulling an arbitrage via nuclear option or if the customers are simply struggling to pay.  Perhaps it’s a combination of both activities?

No credit No Problem?   I think the new motto is No credit, No Recovery!   I keep wondering where all those trillions of tax dollars have really gone.