by Calculated Risk on 1/16/2008 04:07:00 PM

Remember when the credit problems were contained to subprime mortgages? From Greg Ip in July 2007:

"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. Chairman Ben Bernanke largely echoed that sentiment in congressional testimony today ..."

Now from the WSJ: Lax Lending Standards Could End Up Fueling Sudden Acceleration in Auto-Loan Delinquencies

It is becoming clear that several auto lenders let lending standards slip substantially in 2006-07. ... There is also some evidence that credit-card companies made the same mistake.

"The problem of lax loan-underwriting standards was not just concentrated in the mortgage sector; it's looking like it took place across the consumer-finance sector, from credit-card loans to auto loans to motorcycle loans," says William Ryan, consumer-finance analyst at Portales Partners, a research firm.

... Certain classes of loans made in 2006-07 are reporting some of weakest early credit performances in recent memory.

For instance, 2.06% of prime auto loans made in 2006 were more than 30 days past due in November, according to a Standard & Poor's Corp. survey. That past-due number for loans in their first year exceeds the historical high rate recorded in 2001 -- and it is well up from the 1.75% for prime auto loans made in 2005, S&P says.

The past-due numbers for loans made in 2007 are even worse than the 2006 credits -- a trend that exists for both prime and subprime loans, according to S&P.

For both "prime and subprime loans". Just six months ago the Fed thought the problems were contained to subprime mortgages. Well, we're all subprime now.