One of the most progressive credit cards ever launched bit the dust this week. San Francisco-based NextCard, the first Internet-centric VISA card, started unraveling in October when banking regulators questioned the way the issuer classified certain losses. Last Thursday the government finally dealt NextCard a death blow when it shut-down its Arizona bank, NextBank. As a result, Nasdaq halted trading in NextCard’s stock Friday morning before the market opened, and NextCard has since stopped accepting new applications. NextCard’s stock initially opened at $33.50 per share in May 1999 and climbed above $40 per share, but sank to as low as 12 cents per share last week. Launched in December 1997, NextCard had 1.2 million accounts and held approximately $2 billion in card loans at year-end 2001. After regulators got on its case last year, NextCard tried to find an acquisition partner and assemble a “Capital Restoration Plan”. Both efforts failed and the OCC seized the bank last week. While it may be a little complicated for the average Joe to understand, here’s the scoop anyway. . . . The OCC determined that the bank was classifying some delinquent accounts sold into a securitization trust as fraud losses, although the delinquencies were actually attributable to credit quality problems. The assets were being repurchased by the bank at par, a practice that constituted sale of assets with recourse. This finding, together with significant accounting adjustments and the need for additional loan loss reserves, resulted in the bank becoming significantly undercapitalized. The FDIC has made arrangements for current NextCard cardholders to keep using their cards.