Report: Credit squeeze reaches auto loans
There are signs the U.S. credit squeeze is reaching past the mortgage market into a wider range of consumer credit, including auto loans and credit card debt.
Poor quarterly results posted during the past two weeks by U.S. banks suggest credit problems are extending beyond defaults on mortgages to include home equity loans, car loans and credit card balances, The Financial Times reported Sunday.
U.S. banks have raised reserves for loan losses by at least $6 billion during the second quarter -- and by even larger amounts over 2006 -- the newspaper said.
"What started out merely as a subprime problem has expanded more broadly in the mortgage space and problems are getting worse at a faster pace than many had expected," Deutsche Bank analyst Michael Mayo told the Financial Times. "On top of this, there is an uptick in auto loan problems, which may or may not be seasonal, and there is more body language from the banks that the state of the consumer was somewhat less strong (than thought)."
Dick Bove, an analyst at Punk Ziegel, told the newspaper auto loans "are clearly a new area of concern." // Copyright 2007 by United Press International
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