All the mortgages in the pool were subprime — that is, they had been extended to borrowers with checkered credit histories.
In the second quarter, for every dollar of deposits customers stowed in the vaults of big banks, 86 cents was extended to borrowers, according to SNL Financial.
The agency is specifically looking at the way the companies reported their subprime mortgage portfolios and concentrations of loans extended to borrowers who offered little documentation.
The patterns are particularly encouraging in what is called the subprime market -- mortgage loans extended to borrowers with blemished credit histories.
The amount of credit extended to borrowers, which includes credit cards, personal loans and overdrafts, rose by 9.9% compared with a year earlier.
Problems first surfaced in the American sub-prime mortgage market, where too many home loans had been extended to borrowers with no chance of ever repaying them.
A crucial deal came in 1999, with the purchase of Long Beach Financial, a California lender specializing in subprime mortgages, loans extended to borrowers with troubled credit.
Regulators are focusing on the way both companies reported their subprime mortgage portfolios and concentrations of loans extended to borrowers who offered little documentation, also known as Alt-A loans.
Continuing a pattern seen since the housing bubble burst, large majorities of banks reported tighter lending standards on prime mortgage loans, as well as nontraditional mortgage loans and subprime mortgages extended to borrowers with weak credit histories.
The former is being restricted to just small business lending, but the latter has been extended, giving borrowers access to mortgages if they are able to afford the repayments, but have little to put down as a deposit.
The goal is to evaluate whether the generous student loan repayment plan known as Pay As You Earn (PAYE) should be extended to borrowers who are currently ineligible.
