Late payments on consumer loans grew in second quarter

Delinquency rates on consumer loans rose in the second quarter, according to data released Wednesday by the American Bankers Association, largely reflecting the spring's uptick in gas and commodity prices. The ABA's composite ratio, which measures delinquencies in eight installment loan categories, rose 17 basis points to 2.88 percent of all accounts in the second quarter, up from 2.71 percent in the first quarter. The news may impact banks' and lenders' consumer credit decisions in coming months. "Lackluster job creation, private sector uncertainty and public sector job cuts have stalled momentum and increased pressure on consumers as the economy struggles to find a way forward," said James Chessen, chief economist at ABA. The report comes two days after a FICO survey found U.S. bankers expect surges in delinquency rates, stricter underwriting standards and continued struggles in the residential housing sector in coming months. Despite the report, stocks were up Wednesday on reports of improved manufacturing activity, private sector employment and prospects of a compromise on European debt.