Consumer Loan Delinquencies Paint a Bleak Picture

This comes from Reuters:

Fallout from a still deteriorating housing market caused the rate of consumer loan payments at least 30 days late to rise to 3.23 percent in the January-to-March period from 3.22 percent in the 2008 fourth quarter, the American Bankers Association said.

Delinquencies were the highest since the ABA began tracking the data in 1974. Late payments on home equity borrowings set records, rising to 3.52 percent from 3.03 percent on loans and to 1.89 percent from 1.46 percent on lines of credit.

The overall delinquency rate actually understates consumer pain because it excludes bank-issued credit cards, where credit deterioration was severe.

Remember, 2008 was all about a financial crisis. What we are seeing now in consumer and commercial mortgage delinquencies, credit card and other consumer loan delinquencies is what one would expect see in a normal recession. Normally we would expect this record level of delinquency to hit the bottom line at banks, especially those with large asset-backed loan exposure. However, accounting rule guidance may distort the reporting of writedowns. JPM releases on the 16th, BofA (BAC) and Citi (C) on the 17th. So, we should get a good indication how things are reported then.

Comments

[greedcanbgood:]

The first part of the crisis was a LOT of people simply walking away from mortgages that were WAY underwater. They were willing to take a hit to their credit to get out from under something that would take longer to "re-appreciate" than thier credit. Today, it's all about unemployment.

These should trough-out shortly however as non-accruals turn to write-offs. Look for the worst of it 90-120 days after unemployment bottom's out.

Jul 07 11:18 AM

[bbro:]

3.23 from 3.22 give me a break.....01 = bleak picture????

Jul 08 07:02 AM