Banks never really die. Fail, yes. But not die. How nice
it would be if borrowers' loans disappeared when their bank
went under. Everyone with loans at the 103 banks that have
failed this year would be set free. No more mortgage. No more
car loan. No more credit card bill.
Sadly, it doesn't work that way. Thanks mostly to the
FDIC, assets of failed banks seamlessly shift to the
hands of stronger ones.
Never was this more apparent than when Washington Mutual
failed last fall -- the largest bank failure in history.
Almost instantly, WaMu's assets were sold to
JPMorgan Chase (NYSE: JPM).
Thankfully for us, JPMorgan still reports some of WaMu's
results separately from its own. And guess what? They're
absolutely, horrifically, disturbingly terrible. If you've
ever wondered what a positively wrecked bank looks like,
check out WaMu's credit card default rate in comparison to
peers:
Bank
Credit Card Default Rate
Discover Financial (NYSE: DFS)
8.39%
American Express (NYSE: AXP)
8.60%
JPMorgan Chase
9.41%
Capital One (NYSE: COF)
9.59%
Citigroup (NYSE: C) Continued... |