by Joseph Kenny | 08/27/09

Bank of America has chosen to back off the asset-backed securities market, which it used to acquire $13.7 billion in 2008. The bank has the worst overall credit card default rates among its rivals.

American Express, JPMorgan, and Citigroup are some of the issuers that have sold in the neighborhood of $21 billion in credit card-backed debt in 2009 so far using the TALF program, the Federal Reserve's lending program established as a means to encourage bond sales.

Bank of America was the only big card issuers that that failed to sell any bonds and doesn't have the amount of loans in its credit card trust to sell any TALF bonds.

Back in July, Bank of America's credit-card default rate reached an incredible 13.82%. It marked the bank as the highest among the major lenders.

This might help to explain why loans in its trust fail to meet the threshold requirements that would allow it to sell debt via the TALF program.

According to Barclays Capital, approximately 68% of the loans have FICO scores above 660. Basically, anything below 70% would designate an issuer a subprime seller. Investors who might be interested in such debt could request extra protection against the possibility of default.

According to Morgan Stanley, Bank of America has top-ranked bonds that are backed by the credit card payments and trade at a gap of about 1.55% points relative to the one-month London interbank-offered rate.

The bank's default rates are moving in the opposite direction from its competitors. Back in July, the United States average dropped 10.52%, an occurrence that marked the first monthly decline since September.

The only other lender with a higher rate than Bank of America is the Advanta Corporation, which may be on the way out since it drastically slashed nearly a million small-business accounts.