Capital Briefs: Thrift Consumer Loan Chargeoffs Up in '96

The Office of Thrift Supervision warned Wednesday that chargeoff rates rose on car, home mortgages, and credit card loans in 1996.

"We must be diligent in ensuring that institution management closely monitor loan and investment performance, determine the reasons behind any adverse trends, and take corrective actions when necessary," John Downey, the agency's executive director of supervision, said in a memo distributed to regional directors.

Car loans and credit card chargeoffs rose the most, increasing respectively to 1.18% and 4.18%, from .68%. and 3.36%. Mortgage chargeoffs rose slightly to .20%, from .19%.

Thrift loan losses overall were down 50% from their peak in 1991. The agency said chargeoffs stood at .29% of assets in 1996, down from .63% in 1991.

Separately, the agency proposed Wednesday to reduce the minimum liquid asset ratio to 4%, the lowest level allowed by law. The current minimum is 5%.

The ratio compares a thrift's total assets against funds kept as cash or in short-term securities. In the past, regulators adjusted the ratio to influence the amount of cash available for mortgage lending.

But the agency said the ratio has become obsolete because banks and mortgage companies-which are not subject to the rule-have entered the home lending market.