Regulator Raises Red Flag on Auto Lending

Comptroller of the Currency Thomas Curry says sector reminds him of run-up to financial crisis

Comptroller of the Currency Thomas Curry is concerned about the risks auto loans may pose to banks’ safety and soundness. PHOTO: CARLOS BARRIA/REUTERS

Ryan Tracy
Updated Oct. 21, 2015 7:35 p.m. ET

WASHINGTON—A top financial regulator warned of risks in the fast-expanding auto-lending sector, raising the prospect of fresh regulatory pressure in an area that has been a bright spot for banks.

While policy makers have generally declared the U.S. banking system recovered from the financial crisis, Comptroller of the Currency Thomas Curry raised a rare red flag, saying in a speech that some activity in auto loans “reminds me of what happened in mortgage-backed securities in the run-up to the crisis.”

“We will be looking at those institutions that have a significant auto-lending operation,” he told reporters after the speech. Many mortgage-backed securities thought to be safe turned sour during the financial crisis, leading to heavy losses across Wall Street.

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