And until the card issuer officially writes down the debt, the principal that the borrower owes to the issuer is counted as an asset on the issuer's balance sheet.
Yep, but they don't write down all of that debt they first charge insane late fee's and interest for a few months and then sell that highly inflated debt to a collection agency or package up that debt before it defaults and sell that to wall street.
And until the card issuer officially writes down the debt, the principal that the borrower owes to the issuer is counted as an asset on the issuer's balance sheet.