This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Banks Too Big to Fail Also Too Big To Lend Wisely: Street Whispers

Stocks in this article: C WFC JPM BAC

NEW YORK ( TheStreet) --When you're "Too Big To Fail," you're also too big to make good credit decisions, judging from third quarter data published last week by Keefe Bruyette & Woods.

KBW covers more than 200 U.S. banks, but the four Too Big To Fail lenders, Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) collectively showed up on "10 worst" lists in 23 different categories, while appearing on "10 best" lists just twice.

JPMorgan, for example, showed the third-highest rate of credit deterioration, with a 2.2% increase in net new problem loans in the third quarter versus the second. While only 0.4% of its new loans are classified as problematic--generally meaning they are more than 90 days delinquent, had to be restructured, or have been written off entirely--more than 200 banks somehow managed to do better.

Consumer and residential loans were a particular problem for JPMorgan and other TBTF lenders as well--not surprising since big lenders are presumably better at analyzing, understanding and perhaps muscling companies than they are at dealing with individuals.

JPMorgan has the second-highest ratio of non-performing one to four family loans at 14.18%--up from 13.09% in the second quarter and 11.85% in the third quarter of 2011. All four of the TBTF banks made the top 10 list for non-performing home equity loans. The worst of the big four in this category was Citigroup, with 4.35% of its home equity loans classified as non-performing, up from 4.02% in the second quarter and 2.28% in the third quarter of last year.

While credit is improving overall in the banking industry, and some of these bad numbers may be the result of acquisitions of troubled institutions, the data still serves as a reminder that mass-produced products--whether clothes, furniture, or --yes, even loans--are often lower in quality than those that are the result of a more careful process involving a greater degree of individual attention.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs