AOL Money & Finance

As Morgan Stanley (MS) freezes home equity loans, consumers shudder

More

Morgan Stanley (NYSE:MS) has decided it does not want to take the risk of laying out more money on many of the home equity loans it has given to customers. Many of the houses backing these funds are now worth less than their mortgages. According to Bloomberg, Morgan "told thousands of clients this week that they won't be allowed to withdraw money on their home-equity credit lines."

Since most other banks and brokerages with similar loans out to their customers have the same problems Morgan does, it appears that the market is at the beginning of a period where, for many people. getting money from these facilities will come to an end.

Since consumers are already faced with high commodities and oil prices, costly credit, and falling home and stock values, the home-equity loan was one of the last places people could turn for capital.

The news is almost certainly bad for retailers and auto companies. Consumer access to capital seems to be shrinking by the day. Cutting off home-equity withdrawals may take balance sheet risk away for Morgan and its peers, but their customers will get squeezed even harder than the economy is squeezing them now.

Douglas A. McIntyre is an editor at 247wallst.com.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA-17.2410,433.71
NASDAQ-6.832,169.18
S&P 500-0.591,105.65

Last updated: November 25, 2009: 08:07 AM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

WalletPop Headlines