Rochester,NY 8/24/2009 10:27:54 PM
Bank of America Corporation BAC, Shuns Sales of Card Debt, Ducks Subprime Label
Bank of America Corporation
Bank of America Corp., saddled with the worst credit-card default rates among its biggest rivals, is shunning the asset-backed securities market it tapped for $13.7 billion last year.
Bank of America, the only major card-issuer that didn’t sell any, lacks enough quality loans in its credit-card trust to sell TALF bonds without being labeled a subprime issuer.
Bank of America’s 13.82 percent credit-card default rate in July, the highest among the biggest lenders, helps explain why loans in its credit-card trust are shy of the threshold that would allow it to sell debt through TALF and be labeled a prime issuer.
Bank of America’s default rates are moving in the opposite direction from competitors. In July, the U.S. average fell to 10.52 percent, marking the first monthly decline since September, according to Moody’s. The only major card lender with a higher rate than Bank of America is Advanta Corp., which said it may not survive after cutting off almost 1 million small- business accounts. Advanta is unwinding its credit-card trust after defaults surged to more than 20 percent.
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