A slew of poor quarterly results from U.S. banks indicate that problems in the home mortgage sector are spreading to other areas of the economy. Consumers are now having problems paying their other bills as well.

As a result of the mortgage meltdown, banks are increasing their cash holdings to cover anticipated loan losses in a range of areas.

“Banks are adding to reserves not just for defaults on mortgages,” reports the Financial Times, “but also [for] home equity loans, car loans and credit cards.” Over the second quarter of this fiscal year, U.S. banks have raised their loan reserves by at least $6 billion in anticipation of this problem.

According to Dick Bove, an analyst at Punk Ziegel, banks are bracing themselves for “problems with consumer debt that extend beyond the well-known issues ….”

“What started out merely as a subprime problem has expanded more broadly in the mortgage space, and problems are getting worse at a faster pace than many had expected,” said Michael Mayo, a Deutsche Bank analyst.

Although the banks are just now beginning to raise their reserves, as Trumpet readers know, increased consumer defaults on loans should have been expected. Over the past few years, interest rates have been on the rise. Now the millions of homeowners who took out adjustable-rate mortgages when rates were low are paying considerably higher mortgage payments each month. Therefore it is not surprising that rising numbers of homeowners are struggling with other debt too and are turning to credit cards to help pay the bills.

Additionally, during the years of low interest rates and rising home prices, many began using their homes as cash-machines, extracting home equity lines of credit. Now that home values are stagnant or falling in many areas, this source of cash is drying up too.

Curtis Arnold of CardRatings.com, a consumer website, believes late credit card payments could increase among struggling home owners. “When consumers are faced with the choice of making a utility payment to avoid having their electricity being shut off, or making a mortgage payment to avoid losing the most prized asset, their home, then they are usually going to make such payments a higher priority than paying their credit cards,” he said. That principle likely goes for vehicle and other debt as well.

During the first five months of 2007, late credit card payments rose a whopping 30 percent. Total U.S. consumer debt, which excludes mortgage debt, hit $2.46 trillion in June, up from $2.398 trillion at the end of 2006.

From 2000 to 2006, the average card debt carried by Americans grew from $7,842 to $9,659, according to CardTrack.com—and that occurred while home prices were rising and home equity withdrawals were plentiful. Either way you cut it, consumers are in trouble—and judging by bankers’ actions, the banks know it.