A major banking regulator is sounding the alarm about lax car lending standards that are leading to a new round of losses for banks, the Wall Street Journal reported today. There’s been a spike in the average size of car loans that banks and other lenders are writing off as a loss following months of unpaid bills by borrowers, an official of the Office of the Comptroller of the Currency, a unit of the Treasury Department, said yesterday. At banks, the average charge-off for a car loan was $7,618 in the fourth quarter of 2013, up 12 percent from a year ago, said Darrin Benhart, deputy comptroller for supervision risk management at the OCC, citing loan performance data from credit-reporting firm Experian. For the entire car-loan industry, the average charge-off was $8,520, up 17 percent from a year prior, according to Experian. Benhart also expressed concern over a growing trend in the car-loan industry of loans that exceed the value of the car. The average loan that major lenders gave out at the end of 2013 on new and used cars exceeded the value of the car at the time of purchase, he said.
