by Calculated Risk on 7/22/2007 10:01:00 PM

Click on graph for larger image.
Last week, Chairman Bernanke presented this chart to Congress. At the time, Greg Ip at the WSJ noted:

Despite fears in the markets and press that subprime problems would trigger broader contagion, the Federal Reserve has repeatedly predicted that what started in subprime would stay in subprime. ...

A key reason for that confidence is this chart ... showing that the sharp rise in delinquencies has been confined to one class of loan: subprime variable-rate mortgages.

Here is the referenced report: Monetary Policy Report to the Congress My reaction was that Bernanke's chart was flawed, and that we already know that "what started in subprime" has not stayed in "subprime".

This chart is from the WSJ today: States Aim to Stem Tide Of Home Foreclosures With Funds for Refinancing

The two charts present different pictures of homeowner distress. Bernanke's chart shows loans that are 90 days delinquent (as of April and May); the WSJ's chart shows loans already in foreclosure. The WSJ chart clearly shows what we already know: the mortgage problems have spread to Alt-A.

Note: I'd just ignore these state programs. They are very small, and appear to be designed to show politicians are "doing something". The fact that the programs bailout lenders, more than borrowers, is probably lost on most constituents.