Obama's battle to overhaul the credit card industry and rein in their exploitative practices is likely to turn into a sideshow when you take a look at the impact that credit card losses will have on the US economy and US banks.

Credit card debt is the ticking time bomb for banks, says the New York Times. According to the bank stress test results, the 19 biggest US banks could expect nearly $82.4 billion in credit card losses by the end of 2010. Federal regulators called that a "worst case" economic situation" but the paper suggests it could be a lot worse, more than double that figure, reaching as high as $186 billion for the entire credit card industry as unemployment edges up beyond 10%. If that happens, it will expose the stress tests as a giant con because the bar was set too low and were over-optimistic

It's a point taken up by guest blogger Edward Harrison on the Naked Capitalism site. He warns that the banks balance sheets are likely to get worse because of their exposure to commercial real estate and credit card loans.

If these reports are right, the economic contagion could get a lot worse. Those green shoots might turn out to be weeds.