The federal Office of the Comptroller of the Currency is growing increasingly concerned about unprecedented gains in auto loans, increased delinquencies and decreasing value of used cars. A number of lending institutions have eased their standards for loans as they try to stay competitive against peers, leading to growth in unqualified borrowers receiving auto loans and then defaulting on them.
A recent report by the OCC said that some banks may soon face financial stress due to the increase in issues related to auto loans, although it did not name any specific lenders. Some banks have also voiced concern over the issue. According to news reports, Jamie Dimon of JPMorgan Chase has gone on record as saying that the auto loan industry is starting to look "stretched" and fears that lenders will soon see the repercussions of making too many subprime loans. Fitch Ratings reported that the industry is seeing the highest number of delinquent loans since 1996.
The growing delinquencies in auto loans may hit the biggest auto loan makers in the U.S., such as Wells Fargo and Ally Financial, especially hard unless they take steps to avoid making as many risky loans.
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