BUBBLE? As Auto Lending Rises, So Do Delinquencies.

On Wednesday, the Federal Reserve Bank of New York noted increasing distress among auto borrowers with shaky credit, as subprime delinquencies rose in the third quarter.

In the third quarter, 2 percent of subprime auto loan balances became at least 90 days delinquent, up from 1.6 percent in the third quarter of 2014.

In the depths of the recession, in the second quarter of 2009, that rate peaked at 2.4 percent.

“The increased level of distress associated with subprime loan delinquencies is of significant concern,” researchers for the New York Fed wrote in a blog post on Wednesday.

What really got GM and Chrysler in trouble the last time around was subprime lending combined with unprecedented channel-stuffing of months and months worth of unsold vehicles. I haven’t seen any reports of that this time around, so probably the worst that could happen is an ordinary automaking recession, rather than another wave of bankruptcies.