Wachovia, Capital One Say Credit Conditions Worsen

[Purveyor]

Source: Reuters

NEW YORK (Reuters) - The U.S. credit crisis deepened on Friday as Wachovia Corp reported a $1.1 billion loss on subprime mortgage-related debt in October, while Capital One Financial Corp said more customers are missing payments.

Shares of both lenders fell, as did broader market indexes on expectations that write-downs and bad loans will mount.

"This is now worse than Long-Term Capital (Management)," said Jack Malvey, chief global fixed-income strategist at Lehman Brothers Inc., referring to the hedge fund whose 1998 collapse threatened to unhinge global financial markets. "This is a painful lesson in financial engineering."

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CREDIT CARD LOSSES

Capital One, the largest independent MasterCard and Visa credit card issuer, said on Friday its rate of net charge-offs on a managed basis rose to 3.28 percent in October from 2.86 percent in the third quarter.

The charge-off rate in U.S. cards rose to 5.11 percent from 4.13 percent in the same periods, while card loans at least 30 days past due rose to 4.75 percent from 4.46 percent.

"While management previously indicated that the U.S. card loss rate would trend north of 5 percent in the fourth quarter, we were surprised to see how fast this jumped," Credit Suisse analyst Moshe Orenbuch wrote.



Read more: http://www.reuters.com/article/domesticNews/idUSN0932290920071109