{"id":49876,"date":"2019-11-29T10:43:57","date_gmt":"2019-11-29T15:43:57","guid":{"rendered":"https:\/\/olduvai.ca\/?p=49876"},"modified":"2019-11-29T10:44:03","modified_gmt":"2019-11-29T15:44:03","slug":"whats-behind-the-subprime-consumer-loan-implosion","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=49876","title":{"rendered":"What\u2019s Behind the Subprime Consumer Loan Implosion?"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/wolfstreet.com\/2019\/11\/28\/whats-behind-the-subprime-consumer-loan-implosion\/\">What\u2019s Behind the Subprime Consumer Loan Implosion?<\/a> <\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>These are the good times, but why are subprime credit cards, auto loans, and short-term installment loans blowing out?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is the transcript from my podcast last Sunday,&nbsp;<a href=\"https:\/\/www.youtube.com\/watch?v=bswyrpfYwTg\" target=\"_blank\" rel=\"noreferrer noopener\">THE WOLF STREET REPORT<\/a>:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">OK, we\u2019ve got a situation in subprime consumer loans. The delinquency rate on credit-card loan balances at the nearly 5,000 smaller commercial banks in the United States \u2013 this means all banks except the largest 100 \u2013 is blowing out, according to Federal Reserve data. In the third quarter, the delinquency rate at these banks rose to 6.25%. That\u2019s higher even than during the peak of the Financial Crisis.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Back in 2016, the credit-card delinquency rate at these banks was in the 3% range. It has more than doubled in two years.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Credit card balances are considered delinquent when they\u2019re 30 days or more past due. This delinquency rate means that out of the banks total credit card balances, 6.25% are 30 days or more past due. This is a disturbingly large rate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But delinquencies are a flow. Balances are removed from the delinquency basket either when the customer cures the delinquency, such as catching up with past-due payments, or when the bank \u201ccharges off\u201d the delinquent balance against its loan loss reserves. But as these delinquent balances were taken out of the delinquency basket, even more new delinquencies fell into the basket, and the delinquency rate rose.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Subprime auto loans have also been blowing out. \u00a0In the third quarter, the serious delinquency rate of the $1.3 trillion in auto loans has risen to 4.71%, the highest since the worst months of the Financial Crisis, when the auto industry collapsed, and when the US was facing the worst unemployment crisis since the Great Depression. In the third quarter, about 21% of all subprime auto loans were seriously delinquent \u2013 meaning 90 days past due.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What\u2019s Behind the Subprime Consumer Loan Implosion? These are the good times, but why are subprime credit cards, auto loans, and short-term installment loans blowing out? This is the transcript from my podcast last Sunday,&nbsp;THE WOLF STREET REPORT: OK, we\u2019ve got a situation in subprime consumer loans. The delinquency rate on credit-card loan balances at [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,27849,27848,2564,4255],"class_list":["post-49876","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-delinquencies","tag-loan-default","tag-subprime-loans","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=49876"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49876\/revisions"}],"predecessor-version":[{"id":49877,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49876\/revisions\/49877"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}