Bank Charge Off Rate Now Worse than During the Depression

In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than during the Great Depression.

In a new report, Moody's has just confirmed (as

summarized

by Zero Hedge):

The most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934.

And see this.

Here's a chart summarizing the findings (click to enlarge):

(click here for full chart).

Comments

[bbro]

Confusing Moody's doesn't tell you what US rated banks are....adverse
stress test was 4.55% a year for two years...why don't you put that
on your chart compadre????

2009 Oct 26 03:50 PM

[Angry Banker]

Seriously, measuring charge-off statistics 70+ years apart is really meaningless. There were different lending laws, different loan products, different interest rates and numerous other differences which contribute to the varying charge-off rates between these two periods. Tell me, what was the credit card charge-off rate during the Depression? Oh yeah, can't be done because credit cards didn't exist....

2009 Oct 27 08:51 AM

[bbro]

Give me some Kool AId....


On Oct 27 01:45 AM chris coonan wrote:

> with real unemployment around 20 percent, and a good portion of the
> crisis ahead of us....commercial, etc. ---i think that everyone is
> drinking the Kool Aid if they believe we are not headed into, or
> already into a Depression

2009 Oct 28 07:05 AM

[James Lewis]

3.4%, 4.5%

Ha Ha, loan default rates across the board at this rate.
Try 10%....if the banks are lucky.

It pays to default. That will teach the banks.
Bets wya to re-dictribute the wealth is for everyone to stop paying taxes and default on their loans.

2009 Oct 29 10:45 AM