Wednesday, April 15, 2009

WaMu Credit Card Excess Spread Collapses

Some more credit card calamities compliments of Bond View. Unprecedented lows for Washington Mutual's credit card master trust excess spread: a collapse from 4.44% to 1.12% in 1 month, while the loss rate has ballooned to record levels.

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10 comments:

Shawn said...

Tyler, the SPY volume at $85.2 is not a suspense.

Pull up the SPY chart with volume and zoom in to the end of every trading days. Volume always spike towards the last 10 minutes.

Anonymous said...

so you are saying we have had a persistently broken market? i agree. that is the time when programs and correlations rebalance... this fits exactly with ZH's point that in the absence of major flow, you will see huge abberations for reindexing/balancing.

Anonymous said...

hoping this is a "sell the news" scenario....

Anonymous said...

What's this mean for Chase's numbers this week?

Didn't they buy up WAMU's debt?

This should have an impact.

Anonymous said...

Doesn't JPM have a gov't backed guarantee on all the "junk" they acquired from WAMU? Does that make this not have an impact?

Anonymous said...

anonymous commenters: the CC ES does not matter to chases numbers, this is not a liability for them; CC ABS is simply securitized CC loans. the importance of the ES is that the trust mechanics for all issuers/servicers states, as an important feature of the ABS, that if the ES goes to 0 in some time period, the trust or bonds have an early amortization event. this means they stop revolving and must be paid down. its a liquidity event, yes, but its more concerning because it dampens credibility of AAA ratings and the less secured tranches begin to take damage, potentially...not good in the TALF lens

Anonymous said...

thanks @ 7:05

Anonymous said...

I used to be an investor in Advanta and got out months ago when it was clear that the deterioration in the master trust was nowhere near abating. It's amazing to me that these companies went from 3.5% charge-offs to close to 10%. None of them are near a default event and the low libor level is keeping them in business and they still have a spread but any spike in short term rates and these guys are toast.

GG said...

Proud to say I had a role in there! Everybody should buy Gold using credit cards and then default on them. Best trade of the century!

GG said...

Not only will this help collapse the current rotten system faster in a non-violent way, it is a good way to get your tax money back which the US Govt. FORCIBLY took from you and gave to the bankers.