And the lesson about over extending credit to people, no matter their financial viability continues…

JPMorgan Chase & Co. (NYSE:JPM – news) said on Wednesday it tripled the amount set aside for loan losses as even borrowers with good credit defaulted on home equity loans, hurting the bank’s quarterly profit.

The negative trend provides a new worry for investors. Until now, most of the angst has been focused on subprime lending, or loans to people with weak credit.

…

JPMorgan Chief Financial Officer Mike Cavanagh said losses on home equity loans to prime borrowers, or those with good credit, will steepen, partly because U.S. housing prices have flattened or fallen in some areas.

A few years ago most companies in the banking and mortgage industry began extending credit to people with adjustable rate mortgages and high rate credit cards, and it didn’t take a degree in accounting to see the disaster that would befall the financial markets if the market took a turn.

And to think, the market turned.

Now there is a glut in the industry and some people will never be able to pay back what they owe, which will in turn, raise the rates for the rest of us who were lucky enough to get our traditional mortgages and avoid the whole fiasco.

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