Wall Street is hitting the brakes on car loans.
The CEO of JPMorgan Chase's consumer and community banking segment, Gordon Smith, said this week at an industry conference in New York that his company is backing away from the longest types of auto loans, because they could face greater stress in an economic downturn.
"We decided to do a lot less lending" in the 84-month term loan category, he said Monday at the Barclays 2016 Global Financial Services Conference. "Should we see a downturn in the economy ... that will be an area that is more stressed," he added.
At Wells Fargo, which also appeared at the event, the bank added $150 million to reserves in the second quarter, "primarily driven by loan growth in the commercial, auto and credit card portfolios." However, during its presentation Tuesday, much of its Q&A session was dedicated not to auto lending, but to the Consumer Financial Protection Bureau action against the bank after thousands of staffers pushed consumers into accounts for which they did not sign up.