4/4/2008 3:55:24 PM The current state of economic turbulence has been credited with causing domestic consumers to fall behind on car, credit card and home-equity loans at the highest level since 1992, a year after a U.S. recession ended. Lenders are preparing for this reality by doubling reserves for soured debt in the fourth quarter.
JPMorgan Chase & Co. (JPM) actually ceased issuing subprime home-equity loans last year as default rates soared among borrowers with poor credit or high debt. The lender is taking additional steps to reduce risks, including requiring homebuyers to put more of their own money into down payments and utilizing better income proving methods.
Not only are banks and credit card issuers tightening up, auto loan issuers are taking drastic measures as well. AmeriCredit Corp. (ACF), a major auto loan lender targeting buyers with poor credit scores, agreed to let its biggest investor, Leucadia National Corp. (LUK), to begin discussions for a potential acquisition.
CIT Group Inc. (CIT) says that it will stop issuing new loans to domestic students on account of soaring lending costs. Even more shocking is that CIT followed up this announcement with news that it would no longer make government-guaranteed student loans as well.
Some 40 lenders ceased writing various forms of student loans as the global credit-market slump drove investors from bonds backed by educational debt, according to UBS AG analysts. Sales of securities with student loans as collateral dropped an unprecedented 65 percent in the first quarter alone.
These are all indications of a steadily slowing U.S. economy that, when increasing gasoline and food costs are factored in, shows little evidence of being on track for an immediate turnaround.
Source: http://www.rttnews.com/apps/deskalert/article.asp?date=04/04/2008&item=844 
