HSBC struck an ominous note when it warned that non-mortgage loans warranted larger writedowns than previously thought. That played a role in its move to set aside $3.4 billion. The thought is that consumers may be defaulting on credit cards and auto loans as well. We've noted that the credit card-backed debt markets are huge, and worth some thought. At the same time, I do not think this will be a huge issue. My sense is that the sheer scale of ill-conceived loaning beyond subprime mortgages was much more muted. There's a reason there are all those mortgage fraud investigations underway. Still, it is another reason to worry. We may see rates edge higher on these securities.  

For more on HSBC:
- here's a Financial Times article

Related articles:
- Credit crisis to worsen
- Credit crisis rolls on

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