Economists hoped that, even though some US consumers would have trouble making mortgage payments, there was enough income in the market to keep credit card and car payments fairly safe.It does not look like that is working out.

The Wall Street Journal points out that "about 4.5% of auto loans made in 2006 to top-rated borrowers were at least 30 days delinquent as of the end of September, up from 2.9% the previous month, according to a Lehman Brothers survey of companies servicing these loans." About $575 billion in car loans are made each year.

Car loans and credit card debt are treated the same as mortgages. They are rolled into huge pools which are then sold to institutions, like SIVs for example. The pools trade based on the assumed credit risk of the underlying loans. The problem with the system comes when the analysis of the default rates on the loans is way off. It did happen with mortgages, so the Wall St. egg-heads can get it wrong.

It may not have occurred to investors in large financial institutions, but the mortgage SIV problem may be just the first of a trio of failures. "Auto SIVs" may be next followed quickly by "credit card SIVS". Citigroup (C) and its banking and investment banking peers may have more trouble coming.

To put it another way, large banks may have tremendous loans on their books for investment vehicles which put money into pools of car and credit card debt. Those are about to come a cropper.

As Yogi Berra said "Deja vu all over again."

Douglas A. McIntyre

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