Sub-Prime Woes Not Spilling Over To Over Other Credit Areas

by: Chad Brand

Below is an excerpt from the first quarter earnings press release of a consumer lender that serves lower end customers, including some who would be classified as sub-prime borrowers, but is not involved in the mortgage market:

Factors adversely affecting our first quarter results included lower than expected fee assessments due to lower than expected delinquencies...

No, that is not a typo. For all of those people who were expecting the sub-prime mortgage mess to spill over into other areas of credit such as credit cards and student loans, it appears the worries (and subsequent share price declines) were unfounded. Delinquencies were lower than expected!

It might seem baffling to many, but this is pretty good evidence that the sub-prime spillover effect is being greatly exaggerated, a theory I first rejected a month ago in a piece entitled Most Financial Services Companies Dragged Down with Sub-Prime Lenders.